AltaGas, Japanese firm sign deal
Company touts potential of B.C. terminal to satisfy global demand for fuel
CALGARY While liquefied natural gas export projects on Canada’s West Coast are stalled, AltaGas Ltd. signed a firm offtake contract Tuesday for an under-construction liquefied propane export terminal in B.C.
Calgary-based AltaGas signed a deal with Tokyo’s Astomos Energy Corp. to buy half of the 1.2 million tonnes of liquefied propane gas (LPG) per annum the company will produce at its $500-million Ridley Island Propane Export Terminal near Prince Rupert, B.C., beginning in 2019.
“We could see this growing to $500 million per year,” AltaGas chairman David Cornhill said of the value of the deal at a signing ceremony attended by government officials.
He added the terminal could boost Canadian exports to Japan by up to seven per cent each year.
Astomos president Osamu Masuda said Japan does not have enough energy resources to meet its domestic needs and that propane from Canada would help ensure a stable supply for his country. In Japan, 24 million homes use propane to heat their homes and for cooking. Astomos, a partnership between Japan’s Idemitsu Kosan Co. Ltd. and Mitsubishi Corp., is the world’s largest LPG player.
The deal comes a week after Malaysia’s state-owned oil firm Petronas cancelled plans for its $36-billion Pacific NorthWest LNG export terminal on Lelu Island.
“Last week, we got some bad news about PNW LNG not going forward, which was going to be exported from our traditional territory on the coast of B.C.,” Lax Kw’alaams First Nation mayor John Helin said of the cancelled Pacific NorthWest LNG project.
The Ridley Island Propane Export Terminal and the Pacific NorthWest LNG project are located within Lax Kw’alaams traditional territory. The band has backed the LPG development but was originally opposed to Petronas’s LNG proposal before finally agreeing to the project in February 2017.
The LPG export terminal will be the first of its kind on Canada’s West Coast when complete, though competitor Pembina Pipeline Corp. has since also announced plans for an LPG terminal near Prince Rupert as well.
Cornhill said that unlike LNG, the global market for LPG is not oversupplied and there is significant need for the commodity in countries such as India that want to reduce their carbon emissions by switching from kerosene and diesel to propane for heating and cooking. Propane — like butane, ethane and pentane — is a byproduct of natural gas but Canadian producers have struggled with persistently low prices for the commodity and ship the majority of their propane to the U.S. at a large discount.
“Propane in Canada sells for the largest discount of anywhere in the world,” Painted Pony Petroleum Ltd. president and CEO Pat Ward said, adding that when domestic producers earn $12 per barrel for propane here, global price stand at $42 per barrel.
He also said that progress on the LPG industry was a positive development for the Canadian energy industry, which was hurt by the announcement that Petronas’s LNG project would not proceed.
“We need these projects to go ahead and I think all levels of government need to co-operate in encouraging them rather than figuring out how to tax something before it exists,” Ward said.
AltaGas cited worsening global energy prices when it, alongside partner Idemitsu Kosan, shelved its $600 million Douglas Channel LNG project near Kitimat, B.C. in February 2016.