New B.C. energy export facility to feature rail, marine and logistics infrastructure

by Derek Clouthier

AltaGas Ltd., and Royal Vopak announced a positive final investment decision (FID) on the Ridley Island Energy Export Facility (REEF), a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics and marine infrastructure on Ridley Island, B.C.

Following a five-year environmental preparation and review process, extensive engagement with multiple stakeholders including Indigenous rights holders and local communities, the joint venture is set to deliver an export facility that will operate with industry-leading environmental stewardship.

“This positive FID enables AltaGas to continue connecting Canadian energy to Asian markets and drive valuable outcomes for all our customers,” said Vern Yu, president and CEO of AltaGas. “Canada has a structural advantage in delivering LPGs to Asia with the shortest shipping time and lowest maritime emissions footprint. AltaGas delivers more than 19 per cent of Japan’s propane and 13 per cent of South Korea’s LPG imports, connecting our upstream customers with customers in Asia. We look forward to working with our partners to drive more long-term value creation with REEF.”

REEF will be developed on a 190-acre (77 hectare) site adjacent to AltaGas and Vopak’s existing Ridley Island Propane Export Terminal (RIPET), on lands administered by the Port of Prince Rupert (PRPA) for which the joint venture has executed a long-term lease. REEF has been granted the key federal and provincial permits to construct storage tanks, a new dedicated jetty, rail and other infrastructure required to operate a state-of-the-art facility.

The project will have the capability to facilitate the export of LPGs, methanol and other bulk liquids that are vital for everyday life. The project will be developed and brought online in phases. This approach will provide the most capital efficient buildout of the project, match energy export supply with throughput capacity, mitigate impacts on local communities and provide local construction and employment opportunities that will extend over longer time horizons.

Phase 1 will include approximately 55,000 barrels a day of initial LPG export capacity, including propane and butane, 600,000 barrels of LPG storage (95 thousand cbm equivalent), a new dedicated multi-product jetty, and extensive rail and logistics infrastructure. The infrastructure will include 10 dual sided rail offloading slots and 25 kilometres of multi-track infrastructure that is unit-train capable and will provide flexibility to overcome congestion and outages. More than 80 per cent of Phase 1 capital investments will be able to be leveraged in future REEF phases, providing capital efficient buildout of subsequent expansions. The REEF project design has multiple additional advantages compared to other recent large energy infrastructure projects in Canada, including being a single site and operating jurisdiction, having all major regulatory approvals in place, utilizing proven technologies and being aligned with the partners’ core competencies.

As disclosed in the first quarter of 2024, AltaGas has made considerable contracting progress across its global exports’ platform, including tolling levels increasing to 56 per cent starting in the second quarter of 2024. AltaGas is in active negotiations with several long-term counterparties, which would move the company to its long-term tolling target of 60 per cent of total export volumes, for the beginning of the 2027 natural gas liquids (NGL) year, starting on April 1.

With only 10 shipping days to the fastest growing demand markets in Northeast Asia, REEF will be able to efficiently connect Canada’s vital energy products to the world. This includes having an approximate 60 per cent base time savings over the U.S. Gulf Coast, which requires a minimum 25-day shipping time to Northeast Asia, and approximately 45 per cent base time savings over the Arabian Gulf, which requires a minimum 18-day shipping time. This geographic advantage expands when there is significant congestion in the Panama Canal, as has recently been experienced or when other global shipping pinch points experience disruptions.