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Canada Issues New Export License as Propane Supplies Grow

Projected surplus Canadian propane supplies available for export grew Tuesday to 285,000 b/d, when the National Energy Board (NEB) granted the fourth permit for foreign sales from the Pacific coast.

The license enables Pacific Traverse Energy Ltd. to export up to 46,000 b/d of the natural gas byproduct for 25 years from a terminal proposed at the northern British Columbia port of Kitimat.

A target date of 2022 has been set for tanker shipments to start. As a private Vancouver firm still working on engineering studies, negotiating for a site and trawling for customers, Pacific Traverse has not disclosed cost estimates.

The first 9% of propane exports permitted by long-term NEB licenses is scheduled to flow early in 2019, when AltaGas Ltd. makes a 25,000 b/d start from a C$500 million ($400 million) BC terminal nearing completion at Prince Rupert. The AltaGas export license authorizes up to 46,000 b/d for a quarter-century.

Next in line is another 25,000 b/d flow from a second, more modest initial Prince Rupert operation that Pembina NGL Corp. has decided to build by mid-2020 for C$250-270 million ($200-$216 million). Pembina has a 25-year permit to ship out up to 86,000 b/d.

The fourth long-term propane export license granted by the NEB lets up to 107,000 b/d flow for 10 years from Petrogas Energy Corp., part-owned by AltaGas, from 23 potential exit points including a Washington coast terminal at Ferndale.

The combined total of the long-term Canadian propane export authorizations issued to date stands at two billion bbl over their full 10- to 25-year lifespans.

Current earth sciences and engineering estimates of western Canadian propane, presented during NEB reviews of export license requests, peg eventual supplies at 8.7 billion bbl.

Production is forecast to grow steadily from liquids-rich spots in the Montney and Duvernay shale gas formations straddling BC and Alberta, with each providing 130,000 square kilometers (52,000 square miles) of potential drilling targets.

Unlike vastly larger, costlier and stalled BC liquefied natural gas projects, the propane plans call for affordable stages, do not need new pipelines, and use well-traveled railway and trucking services to Pacific coast export terminal sites.

In approving the new export license for Pacific Traverse, the NEB observed that domestic markets for propane across Canada and the United States are over-supplied and only grow slowly. The ruling observed, “there is currently a surplus of propane in North America, with the majority of surplus propane in the U.S. exported to overseas markets, and the majority of surplus Canadian propane exported to the U.S. with small volumes delivered to international markets via the U.S.”

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