AltaGas to invest over $1 billion in natural gas processing and export infrastructure in B.C.

Ferndale LPG facility.

Ferndale LPG facility.

Canada’s gas reserves are abundant and world class. The Montney formation is one of the largest in the world with expected recoverable gas volumes of 449 Tcf under foreseeable economic and technological conditions. A major shale gas and shale oil resource, the play remains competitive largely due to its low-supply cost relative to most other gas basins in North America.

In today’s gas and liquids market, we see the demand in traditional Eastern markets weakening and the United States becoming more self-sufficient. As a result of this market shift, Western Canadian natural gas producers will be faced with slow volume growth and depressed prices if new markets for natural gas are not found.

AltaGas expects to invest over $1 billion in natural gas processing and export infrastructure in Northeast British Columbia to better serve producers in the Western Canadian Sedimentary Basin (WCSB). Our growth strategy is simple, invest in assets that process and move natural gas and liquids to key markets, including Asia.

The company processes natural gas from the prolific Montney region at its Younger, Blair Creek and Gordondale facilities, which are operating close to full capacity. Additional energy infrastructure will be added with the new 198 Mmcf/d Townsend shallow-cut natural gas processing facility, the expansion of Blair Creek, the proposed liquids handling and separation facility near Fort St. John and planned LPG export capability from Canada’s West Coast. Once completed, these facilities will provide producers with a fully integrated offering to move their products seamlessly from wellhead to market.

AltaGas facility in Ferndale, Wash. Photo by Daniel Berman/www.bermanphotos.comToday, AltaGas handles more than two Bcf/d of natural gas. This includes natural gas gathering and processing, NGL extraction and fractionation, transmission and storage, and natural gas marketing. AltaGas is also working with several parties, including producers and partners on the development of energy export infrastructure.

Supporting local and First Nation communities where we operate is an AltaGas core value. Our philosophy is to respect the land, share the benefits and build the friendship. We work cooperatively with First Nations and other aboriginal communities in Western Canada, and over the years have developed solid long-term working relationships with the Tahltan Nation through our run-of-river hydroelectric projects in Northwest B.C. and with the Haisla Nation on the development of the long-term lease and commercial agreements for the Douglas Channel LNG Project. AltaGas has also entered into a partnership with the Indian Business Corporation in Alberta to develop the AltaGas First Nations Development Fund to support the development and growth of First Nation communities.

Through its investment in Petrogas, AltaGas began exporting butane to Asia in 2014, two years earlier than planned from Petrogas’ Ferndale facility, the only LPG export facility on North America’s West Coast. This year, we began exporting propane, and plans are in place to ramp up our export activity to 30,000 Bbls/d by the end of 2015. Petrogas’ extensive North American network and infrastructure has provided AltaGas with the ability to move its products either east or west.

To further develop its plans to help producers reach new markets, AltaGas has entered into an exclusivity agreement to investigate an opportunity to build the refrigeration and related infrastructure to export propane and butane from the Canadian West Coast. The initial phase of this export facility is expected to ship approximately 25,000 Bbls/d with expansion potential. Final investment decision is expected in 2016.

AltaGas facility in Ferndale, Wash. Photo by Daniel Berman/www.bermanphotos.comIn Northern British Columbia, AltaGas expects to start up its pilot project to bring LNG to the region. With an initial investment of $35 million, the company expects to build a network of small liquefied natural gas facilities. Phase 1 consists of a proposed liquefaction facility in Dawson Creek, B.C. that will serve end users in the power generation, space heating, and oil and gas industries. AltaGas is targeting first deliveries in the fall of 2015 with capacity of 20,000 gallons per day.

On the LNG export front, AltaGas is targeting a commercial operations date of 2018 for the Douglas Channel LNG Project to commence LNG exports. The project, located on the Douglas Channel near Kitimat, British Columbia, is a floating liquefaction facility with an initial export capacity of 550,000 metric tonnes of LNG per year. Gas will be sourced from Western Canadian producers and AltaGas processing facilities, and transported to site on Pacific Northern Gas’ (PNG) existing pipeline system. PNG’s customers could see 25 per cent lower transportation costs on their gas bill when the pipeline system is fully utilized by the Douglas Channel LNG Project. PNG is a wholly owned subsidiary of AltaGas.

Plans are also underway to grow the LNG export business to meet producer needs for export capacity. On June 1, 2015, AltaGas applied to the National Energy Board to export up to one Bcf/d of natural gas from our project development site near Kitimat. The application describes our first phase Douglas Channel Project, as well as our intent to expand LNG development up to a total of 1BCf/d through additional liquefaction facilities and pipeline expansion.

AltaGas facility in Ferndale, Wash. Photo by Daniel Berman/www.bermanphotos.com

Our goal is to provide Western Canadian producers with the opportunity to earn higher netbacks for their product by providing fully integrated midstream services. We will accomplish this by providing natural gas producers with access to new markets in Asia, as well as North America through the development of infrastructure in British Columbia. As a company, we are excited about the prospects ahead of us, and look forward to working with producers to develop Western Canada’s world-class resources.

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