June 22, 2024

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AltaGas, Vopak approve construction of energy export terminal in B.C.

AltaGas Ltd. and Royal Vopak NV have approved the construction of a $1.35-billion terminal in B.C. to export energy products such as propane to Asia.

Construction will start this summer on the Ridley Island Energy Export Facility, or REEF, located on 77 hectares of land leased from the Prince Rupert Port Authority.

Calgary-based AltaGas and Netherlands-based Vopak are equal partners in the new venture, with plans to export liquefied petroleum gas such as propane and butane, as well as methanol and other bulk liquids.

“AltaGas and Royal Vopak are pleased to announce a positive final investment decision,” the companies said in a joint release.

The port authority previously granted exclusive rights for developing liquefied petroleum gas and bulk liquids on Ridley Island to AltaGas and Vopak – in the latter’s case, through its Vopak Pacific Canada unit.

“Reaching this critical milestone with Vopak Pacific is good news for Prince Rupert, for B.C. and for Canada, as we continue to deliver responsibly produced Canadian energy to global markets,” AltaGas chief executive officer Vern Yu said in a statement.

“We would not be here without the support and consultation of our Indigenous partners and the community.”

The site preparation for REEF is more than 95-per-cent complete, with the goal to begin operations by the end of 2026. The initial export capacity will be 1.7 million tonnes a year for liquefied petroleum gas. “In subsequent phases, the joint venture will have the option to progress work on fuels of the future, such as hydrogen, which has growing customer interest in Asia, particularly Japan and South Korea,” the companies said.

Port authority president Shaun Stevenson said REEF will be the single-largest investment in the port’s history, adding that the project “will provide unprecedented market access for Canada’s energy sector.”

A neighbouring business, however, complained last year about what it views as the port authority unfairly favouring REEF.

Trigon Pacific Terminals Ltd. filed a lawsuit in B.C. Supreme Court in November, claiming the port authority reneged on a leasing arrangement that would have allowed Trigon to diversify its exports.

Trigon, which operates a coal-export terminal on Ridley Island, has been seeking to expand into liquefied petroleum gas. Ridley Terminals Inc., a federal Crown corporation, formerly owned the export facility, but Ottawa sold it in 2019 to a group of two U.S. private-equity firms and two First Nations.

New York-based Riverstone Holdings LLC and AMCI Group of Connecticut own 90 per cent of Trigon, while the Lax Kw’alaams Band and the Metlakatla First Nation hold the remaining 10 per cent.

The port authority’s statement of defence says AltaGas and Vopak have invested an estimated $70-million on preparations for REEF.

AltaGas also owns 70 per cent of a joint venture that began exporting liquefied propane in 2019 from Ridley Island. Vopak holds the remaining 30 per cent.

“Local residents are advancing careers in an industry that was new to Prince Rupert,” Mayor Herb Pond said in an e-mail this week, adding that new tax revenue from the joint venture has helped strengthen the community.

AltaGas and Vopak handle railcars of propane that arrive from producers of natural gas liquids in B.C. and Alberta, using a route operated by Canadian National Railway Co. The product is chilled and transferred to vessels, which then make the journey across the Pacific Ocean.

In a news release earlier this month, Trigon said it still wants to handle propane and butane at its existing site and decided to submit a project description to the port authority. It also plans to build its second berth on Ridley Island in hopes of exporting hydrogen in the form of ammonia as the energy carrier.

Last week, the Canada Infrastructure Bank announced that it has agreed to lend $150-million to the port authority to help finance the construction of a $750-million export logistics project called Canxport. Ray-Mont Logistics, which specializes in freight forwarding, will be the operator of Canxport on Ridley Island.