AltaGas, Vopak Reach Positive FID on Ridley Island Energy Export Facility

Pictured: The Ridley Island Energy Export Facility (REEF) is described as “a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics and marine infrastructure on Ridley Island, British Columbia, Canada.” It is being developed by the joint venture of AltaGas Ltd. and Royal Vopak, which operate the existing Ridley Island Propane Export Terminal (RIPET). (Image Courtesy of AltaGas and Vopak)

Infrastructure firm AltaGas Ltd. and independent tank storage company Royal Vopak (Vopak) have reached a “positive final investment decision (FID)” on their C$1.35 billion Ridley Island Energy Export Facility (REEF) project in British Columbia, Canada, they reported May 29. REEF is described as “a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics and marine infrastructure” that is expected to come online in late 2026.

The announcement follows a five-year environmental preparation and review process and engagement with multiple stakeholders including Indigenous rights holders and local communities, according to the companies, which formed a 50/50 joint venture for the project’s development.

REEF is slated to be developed on a 190-acre site adjacent to AltaGas and Vopak’s existing Ridley Island Propane Export Terminal (RIPET), on lands administered by the CN-served Port of Prince Rupert (PRPA) for which the joint venture has executed a long-term lease. “REEF has been granted the key federal and provincial permits to construct storage tanks, a new dedicated jetty, rail and other infrastructure required” for the export facility of LPGs, methanol and other bulk liquids, reported AltaGas and Vopak.

The project will be developed and brought on line in phases. This approach, the joint venture said, will allow for “the most capital efficient buildout”; “match energy export supply with throughput capacity”; “mitigate impacts on local communities”; and “provide local construction and employment opportunities that will extend over longer time horizons.”

Phase 1 will include approximately 55,000 barrels a day of initial LPG export capacity, including propane and butane; 600,000 barrels of LPG storage (95 thousand cbm equivalent); a new dedicated multi-product jetty; and rail and logistics infrastructure, according to AltaGas and Royal Vopak. “The infrastructure will include 10 dual sided rail offloading slots and 25 kilometers of multi-track infrastructure that is unit-train capable and will provide flexibility to overcome congestion and outages,” they said. “More than 80% of Phase 1 capital investments will be able to be leveraged in future REEF phases, providing capital efficient buildout of subsequent expansions.”

According to the joint venture, the capital cost breakdown of Phase 1 includes approximately C$875 million for construction of the facility, balance of the plant and LPG storage tanks; and C$475 million for construction of the new jetty, as well as rail and logistics infrastructure.

The joint venture added that AltaGas “has made considerable contracting progress across its global exports’ platform, including tolling levels increasing to 56% starting in the second quarter of 2024.” Also, AltaGas is “in active negotiations with several long-term counterparties, which would move the company to its long-term tolling target of 60% of total export volumes, for the beginning of the 2027 natural gas liquids (NGL) year, starting on April 1,” they said.

REEF will be built and operated under AltaGas and Vopak’s “existing exclusive rights granted by the PRPA” to develop LPG, methanol and other bulk liquids exports on Ridley Island, according to the joint venture.

In subsequent phases, the joint venture said it “will have the option to progress evaluation work on ‘fuels of the future,’ such as hydrogen, which has growing customer interest in Asia, particularly Japan and South Korea.”

Project Progress

AltaGas and Vopak reported completing “all major gating items, including front-end engineering design (FEED) and a detailed Class III capital estimate.” Among other reported project highlights are:

• “Site clearing work is more than 95% complete, and with required permits in hand, the project is expected to come online near 2026 year-end. 
• “Projected gross joint venture capital cost of C$1.35 billion, excluding governmental incentives and support, with annual partnership EBITDA of C$185 million – C$215 million are in-line with the partners’ expectations. 
• “On-site work will be minimized to reduce capital cost risk and community impacts, with 90% of equipment, packaging and pipes expected to be prefabricated off-site in controlled operating environments.
• “The joint venture expects to lock-in more than 60% of the Phase 1 capital costs through fixed-price, lump-sum engineering, procurement and fabrication contracts prior to construction.
• “Vopak and AltaGas expect to fund their 50% pro-rata ownership through each company’s respective financial capacity with no leverage at the partnership level.
• “REEF will enhance Canada’s role as a growing global energy exporter, strengthen Canadian and Asia Pacific energy connectivity and provide Canadian producers and aggregators with access to the premium global markets for LPGs.
• “With only 10 shipping days to the fastest growing demand markets in Northeast Asia, REEF has a structural advantage in delivering LPGs to Asia with the shortest shipping time globally.
• “The project has First Nations support agreements in place and will drive further economic benefits to local communities in Northwestern B.C. through construction activities, long-term job creation and community investment focused on delivering positive outcomes for all stakeholders.”

“This positive FID enables AltaGas to continue connecting Canadian energy to Asian markets and drive valuable outcomes for all our customers,” said Vern Yu, President and CEO of AltaGas. “Canada has a structural advantage in delivering LPGs to Asia with the shortest shipping time and lowest maritime emissions footprint. AltaGas delivers more than 19% of Japan’s propane and 13% of South Korea’s LPG imports, connecting our upstream customers with customers in Asia. We look forward to working with our partners to drive more long-term value creation with REEF.” 

“We are excited to be able to execute on our growth strategy and invest in export infrastructure on this highly strategic location” said Dick Richelle, Chairman of the Executive Board and CEO of Vopak. “Prince Rupert, with the shortest shipping distances between North America and Asia, gives the opportunity to drive progress by increasing the trade between Canada and the Asia Pacific region. We are proud to contribute to this development and are thankful for the good collaboration with our partner AltaGas and other key stakeholders. The trust and support of local First Nations and communities makes this envisioned terminal a reality.”

In a related development, the Canada Infrastructure Bank recently reached financial close on a C$150 million loan to Prince Rupert Port Authority for the first phase of CANXPORT (formerly known as Ridley Island Export Logistics Platform), a new export logistics hub that will expand rail-to-container transloading at the Port of Prince Rupert.