The Covid-19 pandemic only inflicts a temporary setback on overseas propane shipments as byproduct growth for the Canadian natural gas industry, according to AltaGas Ltd.
A year after starting tanker loadings, AltaGas is seeking a second export license for 40,000 b/d of liquids to double traffic allowed at its Ridley Island Propane Export Terminal (RIPET) on the northern Pacific coast of British Columbia (BC).
“Market fundamentals will prevail,” AltaGas said in a filing with the Canada Energy Regulator (CER). “There are no material changes to the outlook at this time.”
Unlike oil suppliers, the Canadian gas industry is not struggling to manage prolonged surpluses and price lows, the Calgary-based processing, storage and delivery firm said.
“Canadian natural gas and propane inventories are at relatively low levels. The need to fill storage ahead of the 2020-21 winter season will likely keep natural gas production and processing for NGL [natural gas liquids] recovery at relatively high levels.”
Alberta oilsands producers responded to pandemic demand erosion by continuing gas-fired thermal bitumen extraction to avoid damaging the deposits while trimming other types of production such as mining, the CER filing noted.
The pandemic does not harm the ideal location of the C$500million ($375 million) RIPET near Prince Rupert. Short shipping distances to Asia have long made the northern BC seaport city an exit gate for other Canadian exports such as grain.
“The competitive advantage of west coast export facilities allows them to operate at high utilization rates even in difficult market conditions,” AltaGas said in its filing with the CER.
Propane also is boosted from the liquefied natural gas (LNG) export terminal underway on the coast in Kitimat, LNG Canada, according to a report done for AltaGas by Calgary energy consulting firm Goobie Tulk Inc. (GTI).
Thanks to the Royal Dutch Shell plc-led export terminal, with an initial 2 Bcf/d of demand and planned growth to 4.8 Bcf/d, Canadian propane supply is forecast to increase by 60% to 393,000 b/d in 2030 from current figures estimated at 244,000 b/d.
Canadian output of the gas byproduct would jump higher, to 434,000 b/d as of 2030, if a second LNG project in BC is sanctioned, GTI said.
A CER market review said the BC export outlet is changing the Canadian energy scene, and the province “is now the second largest exporting province for propane after Alberta.”
As of January, BC propane exports averaged 64,872 b/d. The traffic included 35,293 b/d loaded into northern tankers and 27,232 b/d crossing the U.S. border on railway trains bound for a terminal on the Pacific Coast in Washington at Ferndale.
The propane traffic aboard tankers from BC is poised to grow, CER said. The agency pointed to a 25,000 b/d Prince Rupert terminal under construction for a cost of $175 million ($130 million) by Pembina Pipeline Corp., with further expansion already planned to 37,500 b/d.
Another two propane terminal projects also await regulatory approval and investment decisions.
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