AltaGas ships propane to Asia

CALGARY • While projects to export liquefied natural gas, including one involving AltaGas Ltd., have been attracting much of the attention in Western Canada, another depressed liquefied gas product is finding its way to Asia: propane.

Calgary-based AltaGas said Monday it had begun shipping liquefied propane gas (LPG) from its Ferndale terminal in Washington state to markets in Asia in April following a major production glut in Alberta.

LPG is a byproduct of natural gas extraction and is used by firms such as Dow Chemical Co. to produce a range of products, including polyester for clothing.

“Developing new markets for LPG is key for gas producers,” AltaGas chairman and chief executive David Cornhill said at a Calgary Chamber of Commerce presentation. Executives said the company is looking to build a 30,000-barrel-per-day LPG export facility in British Columbia, but wouldn’t identify a specific location.

“We haven’t disclosed them, but they’re off the Canadian

Developing new markets for LPG is key for gas producers

West Coast,” Cornhill said of potential sites.

Propane prices have plummeted across North America in the past year to the point at which natural gas producers in Alberta are now paying their customers to take the commodity away.

Research from FirstEnergy Capital Corp. shows producers paid roughly six cents U.S. per gallon of propane to their customers at the end of May. By contrast, propane producers earned roughly 75 cents U.S. per gallon in the same week a year earlier.

FirstEnergy analyst Steven Paget said in a note that propane storage in the U.S. was 75 per cent higher at the end of May than in the same period a year earlier.

AltaGas, which is expected to make a final investment decision on its Douglas Channel LNG project before the end of this year, is now exporting 7,000 barrels of LPG per day from its project in Washington and hopes to ramp exports up to 30,000 bpd, executive vice-president John Lowe said.

Lowe added that there’s a surplus of propane being produced from natural gas wells in Alberta, so an export opportunity has opened up. “Alberta could use an export point for over 60,000 (bpd) of propane,” he said.

LPG exports from the U.S. have skyrocketed in the past five years, from roughly 94,000 bpd in March 2010 to 470,000 bpd this past March, the last month for which Energy Information Administration data was available.