By R. Bruce Striegler
In January of this year, Alberta-based AltaGas Ltd. announced that subleases and related agreements were signed with Port of Prince Rupert’s Ridley Terminals Inc. to develop, build, own and operate a proposed Ridley Island Propane Export Terminal. In an interview with Dan Woznow, AltaGas Vice-President of Energy Exports, he says, “Propane has become landlocked in Canada. There’s been a big development in the U.S. with gas drilling in the northeast. Over the last five to six years, from less than 100,000 barrels a day of propane being exported, it’s now closer to 800,000 bpd or more, being exported from the Gulf Coast.”
He points out that Canada used to ship a lot of its propane into the U.S., “But that market has largely dried up. Instead, we can now offer customers the ability to move propane from northeast B.C. and the Edmonton region, a shorter distance out to the coast at Ridley Island and then a shorter distance over to Asia.” He explains that Asia is about 25 days from the Gulf Coast, but from Prince Rupert, it’s about ten days, adding that having to build infrastructure adds further complications and costs to an already highly competitive market.
Mr. Woznow explains the facility will be a typical propane export facility, with a railcar unloading area where propane in pressurized railcars will be discharged into temporary storage containers, called ‘bullets.’ The pressurized propane is then chilled to -42C and transferred to a large storage tank. From the tank, the pressurized gas is transferred aboard Very Large Gas Carriers (VLGC). Mr. Woznow says that the railcars are specifically designed to carry pressurized propane and have been in use across the country for the past 40 years.
“Having a brownfield location is really advantageous and we chose the Prince Rupert site due to its closeness to Asia, its great deep water access and existing rail and highway infrastructure,” The terminal will be constructed to ship up to 1.2 million tonnes of propane annually from B.C and Alberta, from a site that has a history of industrial development. “We’ll use existing CN Rail lines and Ridley Terminal’s existing marine jetty which has deep water access to the Pacific Ocean.” It is estimated that the proposed facility will offload approximately 50 to 60 rail cars per day and by marine transport, deliver approximately 20 to 30 cargos of propane per year to market.
Tapping into a growing Asian marketplace for propane
“We have a Memorandum of Understanding in place with Astomos Energy, one of the largest liquid propane gas (LPG) importers and trading companies in Japan. They’re a joint venture between Idemitsu Kosan Ltd. and Mitsubishi Corporation, founded in 2006. Astomos will purchase at least 50 per cent of the 1.2 million tonnes of propane available from the terminal each year, and Mr. Woznow says AltaGas is working towards a final agreement. Astomos currently operates a fleet of 21 Very Large Gas Carriers, and he says they are looking to expand that to about 30 vessels. Mr. Woznow explains that in Japan, 24 million homes use propane and butane as a primary source of heating and cooking. “Indonesia has been using kerosene a lot for their cooking, and they are getting away from that with the much cleaner burning and easier to handle propane fuel. There is a big conversion in a number of Asian countries, propane is increasingly used to fuel vehicles and, industrially, it is used as a pre-cursor for plastics. There are a number of uses for propane, and utilization is growing as is demand in certain areas of the globe.”
Regulatory and environmental review process near end
Although the Prince Rupert facility may be a first in Canada, it is not the first marine propane terminal that AltaGas has experience with. Woznow explains, “We have an interest in an operation 150 km south of Vancouver located at Ferndale, Washington, which has been operating for about 40 years with no major incidents.” Woznow notes that most Canadian propane exports go to the U.S. by pipeline, truck or rail, while facilities in B.C. consist mainly of rail and truck receipt terminals which serve as distribution centres to feed retail markets.
“We’ve been going through an environmental review process and we’re near the back end of that, and we hope to have decisions before the end of the year,” says Woznow. “We’ve been conferring with local First Nations communities and we’re working through any concerns they may have with continued dialogue.” He adds that on October 18 the project received National Energy Board’s export licence. Preliminary engineering has been completed and a more detailed design is underway. The facility is estimated to cost between $400 million and $500 million. AltaGas is targeting commercial export operations to begin in 2018.
Says Dan Woznow; “It’s been challenging out there to get projects like this done and export our products out of Canada. Hopefully, we’ve got a good site, a project we think can be successful. I believe this is good, not only for AltaGas, but also for Canada, to be able to demonstrate to the globe that we can get things done in Canada when it comes to exporting our land-locked resources.”