In its third-quarter 2016 operating report, Calgary-based AltaGas Ltd. provided an extensive update for its NGL operations in Alberta and British Columbia. While the planned Ridley Island LPG export facility is not yet at the financial decision stage, we expect a positive financial decision will be announced by the end of the fourth quarter subject to necessary approvals.

Ridley Island Propane Export Terminal

The proposed Ridley Island Propane Export Terminal will be located near Prince Rupert, British Columbia. It is designed to ship 1.2 million tonnes of propane per annum. AltaGas will build the facility on a brownfield site that has connections to existing rail lines as well as a marine jetty with deep-water access to the Pacific Ocean. The existing CN network will transport propane from British Columbia and Alberta to the facility.

In second-quarter 2016, AltaGas entered into a Memorandum of Understanding with Astomos Energy Corp. Under the agreement, Astomos will purchase at least 50% of the 1.2 million tons per year of propane available to be shipped from Ridley Island.

AltaGas successfully completed the formal environmental review process in September 2016. On Oct. 18, 2016, Canada’s National Energy Board (NEB) granted AltaGas LPG General Partner Inc. approval for a 25-year license to export up to 1.35 million tons per annum of propane.

North Pine NGL

AltaGas also announced that its board of directors approved a positive final investment decision for the construction, ownership and operation of the North Pine Facility. Located in Fort St. John, the North Pine Facility will have access to the CN rail network and will allow the transportation of propane from the North Pine Facility to the proposed Ridley Island Propane Export Terminal.

Two separate NGL separation trains will be capable of processing up to 10,000 Bbl/d of propane plus NGL mix (C3+), for a total of 20,000 bbl/d.

Construction on the first train will begin in first-quarter 2017 and should be complete in second-quarter 2018. Construction for the second 10,000 bbl/d NGL separation train will follow.

The permit for the North Pine Pipelines is expected in fourth-quarter 2016, with construction to begin in first-quarter 2017. AltaGas expects the facility to be online in second-quarter 2018 and will handle of all of the NGL produced at the Townsend and Blair Creek facilities.

Two existing 30-km NGL egress pipelines (the Townsend NGL Egress Pipelines) currently delivering product from AltaGas’ Townsend Facility will be connected to the North Pine Pipelines to enable shipment of NGL produced at the Townsend Facility directly to the North Pine Facility.

Townsend Gas Processing Facility

In third-quarter 2016, AltaGas began operations at its Townsend Facility. That's important because the AltaGas Townsend Facility has two existing 30 km NGL egress pipelines (the Townsend NGL Egress Pipelines) that will soon enable shipment of NGL produced at the Townsend Facility directly to the North Pine Facility via the North Pine Pipelines . The Townsend Facility is located in northeast British Columbia approximately 100 km north of Fort St. John and 20 km southeast of AltaGas’ Blair Creek facility. This facility has a natural gas processing capacity of 198 MMcf/d. The facility also includes a gas gathering line, NGL pipelines and truck terminal. Additionally, there is a 25 km gas gathering line, which connects the Blair Creek field gathering area to the Townsend Facility.

In addition, the Townsend NGL Egress Pipelines run from the Townsend Facility to a newly constructed truck terminal on the Alaska Highway. The Townsend NGL Egress Pipelines can move initial NGL volumes of up to 10,000 bbls/d each and, with pumping modifications, can accommodate up to 30,000 bbls/d each.

TGP Expansion

AltaGas is also developing a Townsend Gasp Processing facility expansion. Townsend Phase 2 will consist of a 100 MMcf/d shallow-cut gas processing facility and will be located on the existing Townsend site, adjacent to the current facility. NGL produced from Townsend Phase 2 is expected to be transported approximately 70 km to AltaGas' proposed North Pine Facility via existing and planned NGL pipelines owned by AltaGas. Pending regulatory approvals, the company expects the expansion to be online in the fourth quarter of 2017.

Blair Creek plant

AltaGas also owns and operates the Blair Creek natural gas plant located approximately 140 km northwest of Fort St. John. AltaGas completed the Blair Creek plant in 2012 with capacity to process 50 MMcf/d. Today the plant has the capacity to process 84 MMcf/d.

Early Stage Deep Basin NGL

AltaGas is also in the early stages of developing an additional NGL facility. The Deep Basin NGL facility will have the capacity to process up to 10,000 Bbl/d of propane (C3+) and handle up to 4,000 Bbl/d of pentane (C5+). The Deep Basin facility will have access to existing rail and can be connected to AltaGas’ proposed Ridley Island Propane Export Terminal. FID is subject to completing commercial arrangements, stakeholder engagement, and regulatory approvals.

Conclusion

If all projects come to fruition, AltaGas would be able to process 382 MMcf/d of natural gas from the three mentioned processors alone. A majority of the liquids from these facilities could well end up at the North Pine NGL facility.

Based on disclosures around the projects and logistics feeding into the terminal, we believe the Ridley Island Propane Export Terminal at maximum capacity could receive and export 30,000 bbl/d of propane (nearly 1 MM tonnes/year) from the AltaGas Deep Basin and North Pine assets alone.

With Astomos agreeing to purchase around half of the 1.2 MTPA available propane, it looks like AltaGas has lined up both ample supply and delivery logistics which equate to a complete game plane for their Ridley Island facility.

Stay tuned in the fourth quarter to follow the developments from AltaGas as well as other project announcements that could capitalize on the booming propane export market.

Gain more insights at stratasadvisors.com.

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