The bulk carrier Unicorn Ocean loading coal at Ridley Terminals, part of the Prince Rupert port system, in March, 2013.Robin Rowland/The Canadian Press
To understand why Alberta Premier Danielle Smith brings dog-with-a-bone determination to her campaign for an additional oil pipeline to the B.C. coast, look at what’s happened in her province since tankers full of propane started departing Prince Rupert.
Back in 2019, the Ridley Island terminal in northwestern British Columbia opened up an overseas market when it began transferring propane from train cars to massive tankers known as very large gas carriers. Since then, roughly once a week, a VLGC has departed North America’s deepest ice-free harbour for Japan or South Korea, which use the fuel for both heating and fertilizer.
While far lower-profile than the Trans Mountain Pipeline expansion (TMX) – the project got built on time and on budget, with no taxpayer involvement – Ridley Island did for propane what TMX has accomplished for oil. By breaking domestic energy producers’ dependence on U.S. customers, the export terminals significantly increase the industry’s overall profitability.
The LNG Canada facility in Kitimat, B.C., which is expected to send at least six VLGCs full of natural gas to Asia this month, is projected to have the same positive impact.
When Prime Minister Mark Carney talks about Canada as an energy superpower, the former economist isn’t just talking about producing more oil, gas, nuclear and renewable energy. He and Alberta’s Premier have a shared interest in ensuring domestic companies get the best possible price for all the energy they produce.
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Ridley Island is a case study on how building the right energy infrastructure can improve the fortunes of the entire industry.
Prior to 2019, 100 per cent of Canada’s propane exports went to U.S. buyers. These customers paid significantly less than world prices, reflecting regional supply and demand.
Then Calgary-based AltaGas Ltd. teamed up with Dutch port infrastructure operator Royal Vopak to build Ridley Island for approximately $500-million. AltaGas holds a 70-per-cent stake; Vopak owns the remainder.
The country’s first propane terminal can unload up to 140 rail cars each day, from gas producers in B.C., Alberta and Saskatchewan, and fill about 50 VLGCs each year. Tankers take 10 days to reach Asia, a 15-day advantage over traffic from terminals on the U.S. Gulf Coast.
This year, 40 per cent of Canada’s propane exports went to Asia, according to a report from analyst Nate Heywood at ATB Capital Markets. Mr. Heywood said this propane consistently sells for far more than producers would receive from U.S. customers, who set spot prices off what propane is fetching at the strategic hub in Mont Belvieu, Tex.
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The much-maligned TMX is having the same impact on the market for bitumen, which flows from Alberta’s oil sands. This year, bitumen exports to non-American customers doubled, to roughly 7 per cent of the market.
What Canadian producers did send south sold at better prices. The discount between the price of Western Canadian Select heavy crude compared with the U.S. West Texas Intermediate benchmark price narrowed to less than US$10 a barrel, close to US$5 a barrel better than the historical average. Narrowing that spread, or discount, is another shared goal for Mr. Carney and Ms. Smith.
Ridley Island proved the right investment at the right time. Chinese demand for Canadian energy is expected to soar as an offshoot of the Asian country’s trade war with the United States, Mr. Heywood said.
In May, 2024, AltaGas and Vopak announced a $1.35-billion expansion of the Ridley Island project, with the first phase expected to be completed next year. The new facility, being built after consultation with Indigenous communities, will increase propane exports and introduce the ability to also load ships with butane, ethanol and what AltaGas chief executive officer Vern Yu calls “the fuel of the future,” hydrogen.
“Canada has a structural advantage in delivering liquefied petroleum gas to Asia,” Mr. Yu said in a recent press release. The same advantageous economics may exist for an additional bitumen pipeline. Alberta’s government has recruited industry veterans, including Indigenous leaders, to build a case for the project.
As the country builds energy infrastructure that boosts our overseas exports, we are finally making use of our structural advantages.