AltaGas Ltd. is gearing up for its $500-million propane export project, hoping to breathe new life into a northern B.C. port that has been hurt by sluggish coal shipments over the past three years.
AltaGas will begin construction on Ridley Island in the Port of Prince Rupert within weeks, said Dan Woznow, vice-president of energy exports at the infrastructure firm.
The Calgary-based company is forging ahead during a time when an array of export proposals have died or sputtered in Canada, including a cancelled potash terminal and a stalled liquefied natural gas project on Ridley Island.
"In my discussions in Asia, people are really thinking that Canada can't get anything done," Mr. Woznow said in an interview. "But I tell folks locally and overseas that we can get stuff done. And this is an example of getting something done for Canada and showing that we can get our energy products and get them overseas."
The propane terminal is slated to be completed in the first quarter of 2019, creating nearly 250 construction jobs and employing almost 50 full-time plant workers.
AltaGas owns energy distribution operations in Canada and the United States, focusing on natural gas and electricity.
Exporting propane to Asia will be a natural evolution for AltaGas, which has sub-leased land from coal exporter Ridley Terminals Inc.
Ridley Terminals, a federal Crown corporation, had exports of coal and petroleum coke that totalled a record 12.1 million tonnes in 2013, but tumbled to 7.1 million in 2014, 4.4 million in 2015 and four million in 2016.
Exports from Prince Rupert of metallurgical coal, a commodity used in the production of steel, fell 50 per cent last year compared with 2015. A rebound in metallurgical coal prices, however, is expected to bolster shipments this year of coal mined in northeastern British Columbia and transported by train to Ridley Island.
"We're excited about developing the propane project on Ridley Island. The local and regional benefits will be big. It's the site location that allowed us to move this forward in the time frame that we have done so," Mr. Woznow said, noting that AltaGas will share an existing shipping berth with the coal terminal.
The midstream company said it has been collaborating with local First Nations about exporting from their traditional territory.
The propane venture is bolstering as AltaGas is engaged in talks on a corporate acquisition. "Any announcement regarding a potential transaction will be disclosed in accordance with applicable legal and regulatory requirements," AltaGas said last week, after the Wall Street Journal reported that the Canadian firm has U.S. utility WGL Holdings Inc. in its sights.
AltaGas is seeking a partner willing to pick up a 30-per-cent equity stake in the terminal that will cost $450-million to $500-million to construct. At least 50 per cent of the propane will be shipped to Japan-based Astomos Energy Corp.
"The U.S. used to be an importer of propane, but has become a net exporter," Mr. Woznow said. "We believe there is a need for a Canadian solution. The site that we're using is a portion of the Ridley Terminals' coal facility. We're taking over that piece and repurposing that area for propane export, bringing in propane from B.C. and Alberta through the existing CN rail lines. This is an existing industrial site that we're repurposing."
Besides the coal terminal, the other main user of Ridley Island is Prince Rupert Grain Ltd., a grain exporter co-owned by Richardson International Ltd., Viterra Inc. and Cargill Ltd.
Last June, Canpotex Ltd. scrapped its plans to build a Ridley Island potash export terminal, choosing instead to focus on shipping potash from its sites in Vancouver, Portland, Ore., and Saint John.
Royal Dutch Shell PLC holds the development rights for the much-delayed Prince Rupert LNG project on the southern end of the island.
Pacific NorthWest LNG is examining lower-cost options for docking facilities, potentially on Ridley Island. It is unclear, however, whether Shell would agree to an easement for a pipeline to be built from Pacific NorthWest LNG's site on Lelu Island to neighbouring Ridley Island.
Shell said it is still reviewing its options for the LNG rights on Ridley Island that it inherited in the acquisition of BG Group PLC in 2015.
"As long as Shell continues to advance its project in our opinion, they will continue to hold those rights as per our commercial agreement," said Ken Veldman, the Prince Rupert Port Authority's director of public affairs.
Last February, AltaGas halted its own plans to export LNG from a site along Douglas Channel near Kitimat, located roughly 200 kilometres by car east of Prince Rupert.
"We still believe that LNG is something that is possible off the West Coast of British Columbia," Mr. Woznow said. "We haven't given up on LNG as a company. We're still looking for opportunities on that front."