Canada's AltaGas has reached a final investment decision for a British Columbia propane export terminal after receiving approval from federal regulators and will begin construction early this year, the company said Tuesday.
The Ridley Island terminal near Prince Rupert would be the first propane export facility on the Canadian West Coast -- a 10-day voyage to Asia. By comparison, cargoes to Asia from the US Gulf Coast take about 25 days via the Panama Canal.
"The brownfield site also benefits from Canadian National railway access and a marine jetty with deep water access to the Pacific Ocean," AltaGas said in a statement.
The facility, slated to come online in the first quarter 2019, will be able to ship 1.2 million mt/year of propane and cost about $450 million-500 million, AltaGas said in a statement.
"My understanding...is that product is all headed to Japan [and] in discussion with time charter freight to supply it," a shipbroker said. "I don't think you'll see many, if any, spot sold ex-Ridley."
The company already has a memorandum of understanding with Japan's Astomos Energy for the purchase of at least 50%, or 600,000 mt/year, of the total planned output.
US LPG exports, the bulk of which is propane, have increasingly been sent to Asia, with China, Japan, South Korea and Singapore combined making up roughly 40% of US LPG exports in October, which averaged 1.07 million b/d, US Energy Information Administration data shows.
US Gulf Coast exports of propane averaged 778,000 b/d in October, near the record high 799,000 b/d in May, and up from just 28,000 b/d 10 years ago, according to the EIA.
The Ridley Export Terminal will initially be 100% owned and operated by Altagas, the company said, adding it is keeping options open to sell 30% stake in the planned facility.
AltaGas was not available for comment Wednesday. But the company said last year that propane will be sourced primarily from the six large natural gas processing facilities in British Columbia and Alberta in which AltaGas has working interests.
In October, AltaGas reached a final investment decision for the North Pine NGL separation facility in British Columbia, which will entail the construction of two separate NGL separation trains, each capable of processing a total of 20,000 b/d of propane and NGL mix.
The project will be connected to the company's existing infrastructure in the Montney basin in northeast British Columbia and will also have access to the CN Rail network that will supply propane to the Ridley Island terminal.
