What’s the value of having more than one customer to buy your product? Read More
’Any economics degree would say there’s always value to optionality’
‘Any economics degree would say there’s always value to optionality’
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What’s the value of having more than one customer to buy your product?
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For Canadians facing an evolving and unpredictable trading situation south of the border, increased shipments of propane and oil to Asia provide a textbook example of why optionality matters.
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The $34-billion expansion of the Trans Mountain oil pipeline is moving more crude from Western Canada to customers in Asia, providing some measure of market diversification beyond the United States.
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Today, Calgary-based AltaGas Ltd., which operates a propane export terminal on the British Columbia coast, is building another export project: the $1.35-billion Ridley Island Energy Export Facility (REEF), near Prince Rupert, B.C.
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Noon News Roundup
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Once the new project’s first phase is completed near year-end 2026, it will have the capacity to export 56,000 barrels per day (bpd) of liquefied petroleum gas (LPG) — propane and butane — to international markets.
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“Because we’re offering a unique opportunity for Canadian producers to access the Asian market, we’re still seeing incredibly strong demand,” CEO Vern Yu said in an interview, noting the existing export facility is improving customers’ netbacks by about $5 to $10 a barrel.
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“There’s for sure a blueprint here for what value we are adding — and the fact that world demand for our product is strong and that we shouldn’t be captive just (to one) market.”
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During a period of U.S. tariff threats, public opinion surveys show most Canadians support building new oil and gas pipelines that could increase access to other parts of the country or new international markets.
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It’s sparked a political debate on the federal campaign trail, with both the Conservatives and Liberals pledging to speed up the process to approve major new energy infrastructure in the national interest.
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Until the Trans Mountain expansion (TMX) project was completed last May, virtually all Canadian oil exports were headed to the United States.
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A recent report by RBC Capital Markets indicates 19 tankers left the Westridge Marine Terminal in February, with seven heading to California, while “exports to Asia continue to remain robust,” with nine direct shipments to China.
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In total, about two-thirds of volumes from TMX went to Asia, versus 35 per cent to the U.S, the RBC report found.
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However, Canada still exports more than four million barrels per day to the United States. And last year, 95 per cent of Canadian oil exports went into the U.S., even with the Trans Mountain expansion operating for eight months.
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For the propane market, that situation has received much less attention, but is important.