AltaGas has advanced its plan to be the first to export liquefied propane from the British Columbia coast, announcing Thursday it has struck a deal on an unspecified site and that it will build a new gas fractionating plant in northeastern British Columbia. AltaGas reported a net loss of $22 million in the second quarter versus a profit of $29 million a year earlier as revenue fell to $416 million from $471 million.
“On the growth front, we are well on our way to provide producers with a solution to weak liquids prices,” said chairman and chief executive David Cornhill on a conference call to discuss second-quarter results.
He said the Calgary-based company could invest over $1 billion over the next two years in B.C., including the liquefied petroleum gas (LPG) plant on the coast, the new fractionation facility worth about $100 million at Fort St. John and its previously announced $350-million Townsend gas plant in northeastern B.C., along with associated pipelines.
“The site will initially be able to handle 25,000 barrels per day with significant expansion opportunities,” said Cornhill. “We expect to finalize agreements by the end of the year and we expect to be the first to export LPG off Canada’s West Coast.”
AltaGas said it will make a final investment decision on the B.C. LPG facility next year. It is expected to buoy propane prices by giving Canadian producers awash in the fuel an alternative to domestic or U.S. sales. The propane would be delivered by rail.
Executives wouldn’t say whether part ownership would be extended to AltaGas’s partner, private Calgary-based Petrogas, or local native communities.
Meanwhile, AltaGas reported the Ferndale LPG export facility in Washington State operated by Petrogas is expected to ramp up exports to 25,000 bpd by the end of the year.
The Ferndale terminal acquisition in March 2014 provides a strong fit for AltaGas Ltd. and Idemitsu Kosan Co. Ltd., which recently acquired interests in Petrogas. The facility gives AltaGas direct offtake for its production and for Idemitsu to acquire North American LP gas for its sales and distribution infrastructure in Japan as well as its other interests in southeast Asia, the press release also notes.
The LP gas terminal has the capability to handle exports and imports of up to 30,000 barrels a day and has facilities to handle and supply propane to the regional market for U.S. domestic consumption. The terminal has rail, truck and pipeline capability and is connected to the two local refineries offering LP gas balancing services
AltaGas missed analyst expectations on earnings and cash flow for the three months ended June 30 mainly because it did not receive a dividend from Petrogas, in which it holds a 33 per cent stake.
Chief financial officer Deborah Stein said Petrogas, which diverted the money to invest in building storage facilities in the second quarter, is expected to pay $30 million to $40 million per year in future.
Cornhill said AltaGas is negotiating to receive more regular dividends from Petrogas in return for a pledge from AltaGas to support capital projects separately.
AltaGas reported a net loss of $22 million in the second quarter versus a profit of $29 million a year earlier as revenue fell to $416 million from $471 million.
FirstEnergy Capital analyst Steven I. Paget said second-quarter adjusted earnings of $107 million fell below his expectation of $128 million and consensus of $115 million, while adjusted cash flow per share was 50 cents, below FirstEnergy’s 69 cents and consensus of 62 cents.
AltaGas also confirmed Thursday it and its three international partners in Douglas Channel LNG plan to make a final investment decision in the fourth quarter of this year on their liquefied natural gas export facility.
They propose a barge-based facility near Kitimat to supercool and liquefy gas for export.
The project site is secured by a long-term lease with the Haisla Nation and initial capacity is to be 550,000 tonnes per year, making it one of the smallest of B.C.’s 18 or so proposals.