The Canadian upstream firm is refocusing its LPG exports on markets in Asia as US tariffs are due to come into force early next month, writes Amy Strahan
The US' possible implementation of a 10pc tariff on Canadian energy imports underscores the benefit of shifting as much LPG exports as possible to markets other than the US, according to Canadian midstream company and seaborne LPG exporter AltaGas.
"With US tariffs, it's even more critical to connect Canada's energy exports to Asian markets," AltaGas chief executive Vern Yu said on 7 March. US president Donald Trump repealed his administration's implementation of the 10pc tariff for another month on 6 March after they officially came into force on 4 March. Yet the uncertainty still led to buying interest at the LPG trading hub in Edmonton, Alberta, withering as market participants tried to gauge when the 10pc tax might be introduced while simultaneously trying to negotiate term contracts for next winter.
AltaGas says it does not expect any significant impact on its natural gas liquids (NGL) operations from the tariffs but has stopped short of giving any financial guidance past the first half of this year, citing slower-than-normal term discussions and subsequent delays to its hedging programme for full-year 2025. "Tariffs will have a negative impact on the cash flows of our upstream customers, but tariffs will be partially offset by a stronger US dollar," Yu says. "As a result, we do not expect material changes to natural gas and NGL production volumes." The Calgary-based firm expects Canadian natural gas production to rise by 25pc by 2030 as domestic producers, similarly to those in the US, ramp up operations to supply upcoming LNG export projects.
Canada exported 123,600 b/d (3.64mn t/yr) of propane by rail to the US in 2024, the Canada Energy Regulator (CER) says, with a fraction of this — about 23,000 b/d — transiting to Mexico, based on data from the US EIA. Canada faces the same growing LPG supply length as the US linked to gas production expansion, and while seaborne exports to northeast Asia from terminals on its Pacific coast are rising, it is still reliant on deliveries over the border to the US — seaborne to rail are split. As a result, propane prices at Edmonton trade at a discount to equivalent prices at the US midcontinent hub of Conway to maintain southbound flows.
The US tariffs are expected to weigh on LPG prices in western Canada, according to market participants and AltaGas. "Canadian NGL prices will partially discount to offset the cost of tariffs while Asian prices will remain unchanged. This will cause a wider Canada to Asia LPG spread, which we expect to be modestly additive to our merchant export margins," Yu says.
AltaGas exported 122,200 b/d of LPG from its Pacific coast terminals in Ridley Island, British Columbia, and Ferndale in the US state of Washington, during the fourth quarter of 2024, up by more than a third on the year. Exports from the two terminals over the whole of last year rose by 15pc from 2023, the firm says. Northeast Asian delivered propane prices under the Argus Far East Index (AFEI) averaged an $18.85/bl premium to US Gulf coast Mont Belvieu LST prices in the fourth quarter, compared with a $26.44/bl premium a year earlier. Roughly 87pc of AltaGas' LPG exports loading in the first half of 2025 are under long-term deals or hedged on an AFEI basis against US pricing at $18.61/bl.
Corral Reef
The company continues to work on expanding its exports after reaching a final investment decision on its new 56,000 b/d (1.8mn t/yr) "Reef" LPG terminal, adjacent to the Ridley Island propane terminal, last year and plans to open it in 2026. AltaGas is also working on removing methanol from its propane shipments although it has not provided a timeline. Once completed, propane loaded at Ridley Island will meet quality specifications for more markets in South Korea and Japan, as well as propane dehydrogenation facilities in China, Yu says.
