Q&A: Trigon bullish on Pacific coast LPG project
Canada's Trigon Pacific Terminals, operator of the 18mn t/yr Prince Rupert coal terminal in British Columbia, announced late last year that it would repurpose part of the facility to LPG, with first exports planned for around 2028. This will make it the fourth LPG terminal operating in close proximity on the Canadian Pacific coast when it opens, joining midstream firm AltaGas' Ridley Island propane terminal and its Reef project, due to start up in 2026, as well as peer Pembina's Watson Island terminal. All aim to capitalise on growing domestic natural gas liquids (NGL) production and increasing demand from northeast Asian importers, attracted by the shorter sailing times compared with the US Gulf coast. Argus' Yulia Golub spoke with Trigon chief executive Rob Booker about the project:
Can you provide an update on the Trigon Pacific LPG project?
We have completed [early engineering and design] work and have submitted the project description to the port authority. We have been seeking the port authority's permission to handle LPG and to perform the necessary regulatory functions. We are very confident in our design work. If we were permitted to go today, we could start exports at the end of 2028 or early 2029. However, we have a civil litigation with the Prince Rupert Port Authority that we need to work through.
Trigon has faced challenges from the Prince Rupert Port Authority since announcing the project. Is this likely to delay permitting for the project?
We have been in civil litigation with the port authority over various issues for almost eight months now. Most of these issues are over document release [regarding time-limited exclusive rights for the export of LPG from Prince Rupert granted to AltaGas and Vopak]. We have been very proactive but it has been a very slow process. We will be back in court in September, and if it is not resolved by then, it is likely to end up in court again in early 2025. But we are excited about our project and confident in our legal case. We know the coast can support multiple terminals for LPG export growth.
Will the terminal be able to handle VLGCs?
Yes, the second berth is designed to handle VLGCs, and the first berth is already handling VLGCs and can handle larger vessels if required. The berth is designed to hold four liquid arms and can handle different liquids. For example, one arm can handle LPG, another ammonia, and other liquids such as biofuels and biodiesel. In Japan, some vessels are designed to carry split cargoes, both LPG and ammonia. The planned design has a capacity of between 1.8mn t/yr and 2.4mn t/yr, depending on the product. The berth can handle around 9mn t/yr of liquids, so the smaller number is the first step in the LPG plan.
To export LPG from Canada, firms must obtain an export licence from the Canada Energy Regulator. Are you in the process of obtaining such a licence?
We are interested in providing the service of unloading railcars, storing the product, and loading ships. So, shippers will obtain the LPG licence. It's likely we will apply for and receive one as well, but we are still working through those dynamics with potential partners. Some partners have expressed their interest and clearly want to export their own LPG, and they would be responsible for getting an export licence.
Canada faces a possible rail strike from 12 August. Are you expecting this to impact rail shipments to ports?
A CN [Canadian National Railway] rail strike would impact all commodities. The labour relations board is going to rule on whether some goods are deemed essential and some are not. It's hard to predict and will be interesting to see how that goes. The railways would have a 30-day cooling period after that. If granted, it could allow the negotiations to prevail and a settlement to be reached. If the strike happens, the Port of Prince Rupert will be affected. Businesses and their customers would be directly impacted. Historically, these have never been long outages in Canada, but we are not very quick to recover either. When you lose several days of operations, it takes a long time to recover because we don't have much spare capacity in the rail system. If we are moving a certain number of trains before the strike, we will move the same number after the strike. We are not going to magically increase the number of railcars we can move.
LPG exports are increasing from AltaGas' Ridley Island propane terminal and its adjacent Reef project will add further capacity, while Pembina is reconsidering expanding its Watson Island terminal. Are you concerned about rail congestion once you begin LPG exports?
No, because I think this rail line is underutilised today. In 2020, the Port of Prince Rupert was exporting 30mn tof goods, but today we are only exporting 22mn t. So, the port has suffered a significant loss of volume in the past few years. We would be lucky if this year is not another year when volumes decline, or if we are lucky, we may stay at the same level as 2023.
What is driving the decline in exports from Prince Rupert?
It's a combination of fewer container exports and fewer coal exports. The declines have been offset by a recovery in LPG and grain exports, but not enough to offset the total losses. Frankly, we have not been competitive as a port. In the same timeframe of 4-5 years, exports from the Port of Vancouver have gone from 132mn t/yr to 145mn t/yr. It's not that the volumes are not there, it's the competitive nature of things and other influencing factors. But speaking of rail capacity, even at 30mn t of exports out of Prince Rupert, the CN rail line is underutilised. The issue isn't rail capacity — I think the rail has a lot of capacity. CN is very adept at meeting growing volumes as required. And in 2030, we will have to stop coal exports, resulting in a lot of lost volume and extra capacity to move other products. One reason LPG is moving so well right now is because of a downturn on the container side.
Related news posts
Indonesia issues regulation to build energy reserves
Indonesia issues regulation to build energy reserves
A strategic energy reserve comprising stocks of LPG, oil and gasoline could be ready by 2035 under a presidential decree, writes Prethika Nair Singapore, 17 September (Argus) — Indonesia's government has issued a presidential decree outlining plans to build strategic energy reserves, including LPG, by 2035. The decree sets out the goal of establishing stockpiles amounting to 9.64mn bl of gasoline, 10.17mn bl of oil and 525,800t of LPG within the next 11 years. "The government is aware of the importance of having sufficient energy reserves to handle risks such as global oil price fluctuations, natural disasters, or supply disruptions," Indonesian agency the National Energy Council's (NEC) secretary general, Djoko Siswanto, said on 6 September. "The provision of the [reserves] will be carried out in stages until 2035, according to the country's financial capabilities." Funds for establishing the reserves will come from the state budget and other legitimate resources, he said. The NEC will oversee the regulations while the energy ministry and companies with permits in the energy sector will manage the reserves, according to Djoko. Management includes procurement of supplies from domestic production or imports, as well as investment in infrastructure and maintenance, and the use and recovery of the reserves. The location of the reserves will be based on local geology, ease of distribution, spatial planning, supporting infrastructure and the potential for crises or emergencies, and where infrastructure is not sufficient, new facilities will be built, Djoko said. Indonesia aims to reach 1mn b/d of oil production and 12bn ft³/d (124bn m³/yr) of gas production by 2030. But its oil output fell to 606,000 b/d in 2023 from 612,000 b/d in 2022, energy ministry data show. The country's LPG imports amounted to about 6mn t in 2023, energy minister Bahlil Lahadalia says. This contrasts with imports of just over 7mn t, relatively unchanged from a year earlier, Kpler data show. The country imported around 369,000 b/d of gasoline and 29,000 b/d of crude. The energy ministry in August announced plans to boost oil and gas output by reactivating up to 1,500 idle wells, drilling more than 1,000 new wells a year and increasing recovery rates at existing wells to 50pc from 30pc. Indonesia gas production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Poland struggling to prepare for looming LPG shortfall
Poland struggling to prepare for looming LPG shortfall
Warsaw acknowledges the LPG shortage the country faces but has done little to support the domestic sector, writes Waldemar Jaszczyk London, 17 September (Argus) — The Polish government has woken up to the risks posed by the upcoming EU embargo on Russian LPG, but current measures are falling short of the industry's requests and a significant upcoming shortfall is looking increasingly likely. Warsaw is attempting to get ahead of the curve by analysing the latest information from the domestic LPG market in weekly crisis reporting. The data show a decline in imports from Russia as a direct result of the industry's preparation for the EU's ban from December, the Polish energy ministry says. This is apparently contradicted by Russia increasing its share of Polish LPG imports to 53pc in the first half of 2024 from 50pc a year earlier, with Russian prices 25pc lower than northwest European equivalents. But deliveries have slumped this summer for various reasons including payment problems. Still, the Polish government estimates an initial product shortage of 300,000 t/yr given insufficient import and distribution infrastructure, growing consumption and more re-exports to Ukraine. In the worst-case scenario, state-owned refiner Orlen is prepared to cover the most politically sensitive demand sector — residential heating — with its production, its risk management director Jakub Ruszel recently told lawmakers. The company operates Poland's 373,000 b/d Plock and 210,000 b/d Gdansk refineries, in addition to the 190,000 b/d Mazeikiai refinery in Lithuania and the 108,000 b/d Litvinov and 66,000 b/d Kralupy plants in the Czech Republic. Household and commercial heating accounted for around 10pc of the 2.5mn t/yr market in 2023, according to Polish LPG association POGP. The LPG industry hopes to avoid the logistical issues that haunted the market during the immediate diversification drive in 2022. Coal transportation by rail was given priority over other fuels after Poland's Russian coal imports ban. This time, railway operator PKP PLP has been told to prioritise LPG should bottlenecks emerge. Upgrades to ports that capped rail capacity have also now largely been completed. And although more investment is needed, with only two out of six Polish-German rail crossings electrified, a predicted increase of 1,000 trains arriving from northwest Europe each year can be accommodated, the infrastructure ministry says. The main logistical problem is likely to be throughput at privately run terminals, according to the government. Most rail terminals are on Poland's eastern border with Belarus, with only two projects planned to raise import capacity in the west. Polish trading firm Barter plans to commission a 400,000 t/yr terminal in Slawkow in December. And Polish oil company Orlen is expanding its Szczecin terminal on the Baltic Sea by 50pc to 400,000 t/yr, but not until mid-2025. These will help, but they fall well short of adding enough capacity to replace lost Russian supply. Private matters But although the government is more aware of the coming shortfall, the domestic sector is largely having to fend for itself. Plans for a state-owned seaborne terminal were rejected on the basis the industry has had little state intervention to date, and a request for lower fuel duty for firms that invest in infrastructure was also denied. The 2015 tax was introduced to establish strategic LPG reserves, with the private sector contributing $643mn so far, according to separate LPG association PIGP. Simplifying environmental permitting procedures has received more consideration from Warsaw. Local authorities are required to process applications within three months, but this often extends to a year or more, according to market participants. The environment ministry started talks with regional administrations in July to improve investment conditions, but progress has been hampered by recent government reshuffles. The responsibility for energy resources has been transferred from the environment to the new industry ministry as of 1 August, temporarily halting engagement with the LPG industry. Poland sea LPG imports by origin Poland LPG infrastructure Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Duqm plans key to Oman’s LPG export outlook
Duqm plans key to Oman’s LPG export outlook
The revival of a major petrochemical project could cap exports despite rising production, writes Ieva Paldaviciute Dubai, 17 September (Argus) — Production from the new Duqm refinery has boosted Oman's LPG output this year, and driven an 89pc year-on-year rise in exports to 371,000t for the first eight months of 2024, according to data from analytics firm Kpler. But plans for new petrochemical facilities linked to the refinery could put a cap on export capacity in the near future. Oman's LPG output has more than doubled within the past decade, from 420,000t (13,400 b/d) in 2015 — the earliest year for which energy and minerals ministry data are available — to around 990,000t last year. That is due in large part to the start-up of state-owned OQ's Salalah LPG extraction plant in the southern Dhofar governorate. The first-of-its-kind gas treatment project in Oman and now contributes close to 300,000 t/yr to the country's LPG output. The majority of Oman's LPG production now comes from downstream facilities operated by OQ — around 62pc of last year's output came from its 198,000 b/d Sohar and 106,000 b/d Mina al Fahal refineries. Another 30pc came from the Salalah LPG plant, and just 8pc from the upstream Bukha and West Bukha, Saih Rawl and Wadi Aswad fields. Shortly before the Salalah plant came on line, OQ in early 2021 started up its Liwa Plastics Industrial Complex (LPIC), whose 880,000 t/yr ethylene steam cracker would fast become a major LPG consumer. Output from the steam cracker, in turn, feeds the complex's 880,000 t/yr polyethylene and 300,000 t/yr polypropylene units. This contributed to a near collapse in Omani LPG exports in the first quarter of 2021, as OQ started diverting the Sohar refinery's LPG output to feed LPIC. But once the Salalah LPG plant began to ramp up, Oman managed to gradually resume exports, this time from Salalah port. This has enabled Oman to export refrigerated LPG cargoes on larger tankers, with Sohar previously only able to accommodate pressurised or midsize carriers. Oman is now a net LPG exporter, but still imports the occasional cargo when Sohar is unable to provide sufficient feedstock supply to LPIC — Sohar port received 104,000t of LPG between January and August, according to data from analytics firm Kpler. Both the Sohar refinery and LPIC are in northern Oman, far from the sultanate's other LPG production points. Chemical ambitions Oman's LPG output and exports have been lifted this year by new supply from the 230,000 b/d Duqm refinery, which at full capacity can produce up to 15,000 b/d of LPG. The facility was inaugurated in February but appears to have exported its first LPG cargo in September 2023, according to Kpler data, although this is not recorded in government data. But future exports could be capped if a new planned petrochemical complex, fed with naphtha and LPG produced at Duqm, is built alongside the refinery. Operator OQ8 — a 50:50 joint venture between OQ and Kuwait's state-owned KPI — initially had plans to build a 1.6mn t/yr petrochemicals complex, but design works were suspended in 2020, during the early part of the Covid-19 pandemic, because of the uncertain demand outlook. Plans appeared to have been revived in 2022, when OQ and KPI welcomed Saudi chemical giant Sabic onboard to develop a jointly owned petrochemical complex in Duqm. This project envisaged construction of a steam cracker and derivative units, as well as a natural gas liquid extraction facility. The three parties signed a non-binding agreement in late 2022, but a final investment decision has not yet been made. Oman LPG infrastructure Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LPG World editorial: Cracks appear
LPG World editorial: Cracks appear
The emergence and growing supplies of alternative feedstocks are challenging LPG's position in Europe London, 17 September (Argus) — The European petrochemical sector's growing appetite for LPG has been vital in maintaining the region's position as an important LPG hub over the past few decades. But this outlet could come under increasing strain from more readily available and competitively priced naphtha from European refineries, as well as ethane from the US, all while regional olefins production flags. Europe's LPG production and demand for LPG as a fuel is in a state of long-term decline. The former is being constricted by North Sea field decline and energy transition pressures in Norway and the UK, even if investment is made to try to shore up North Sea oil and gas supplies in the prelude to net zero. It is also hamstrung by an ageing refining sector sorely lacking in investment and also at threat from the energy transition. Non-petrochemical LPG consumption meanwhile has been sliding and would have fallen more sharply were it not for the growth in autogas sales in eastern Europe — another sector moving towards decarbonisation. This demonstrates how important cheap and abundant US LPG imports have been in terms of supply, and investment in the flexibility of Europe's fleet of ethylene steam crackers in terms of demand. The latter has arisen from the year-round discounts LPG has secured over naphtha feedstock since US supplies started washing up on Europe's shores. But healthy LPG discounts to naphtha could be about to shrink, because European refineries are increasingly producing more naphtha at the same time as oil products and cracker feedstock demand wanes. The region's refiners have found naphtha weighing much more heavily on their bottom lines since the Covid pandemic. Naphtha's discount to North Sea Dated crude has averaged $8/bl this year in northwest Europe and $11/bl since 2022, compared with $4/bl in 2010-19. EU refiners produced much more naphtha this year and last year than they delivered domestically, including to petrochemical producers, Eurostat data show. This is because the best-value crude for them has become increasingly light. The loss of Russian medium sour Urals owing to EU sanctions has been partly offset by more naphtha-rich US light sweet WTI arriving in the region — climbing to about 1.86mn b/d in the first half of the year from 1.45mn b/d in 2022, Kpler data show. The light naphtha increasingly emerging from refineries is more suitable for cracking. But EU olefins output has shrunk since the pandemic, with cracker operating rates still trailing far behind those prior to 2020. European polypropylene production last year was the lowest since at least 2013 and 20pc lower than a 2017 peak, Eurostat data show. This is partly because the EU petrochemical sector has lost competitiveness with its Asian rivals. Cheap slates The US shale boom that has flooded Europe with cheap LPG has also blessed the US with bountiful volumes of an even cheaper petrochemical feedstock — ethane. Overseas shipments have grown over the past two decades, but the investment needed in ethane-fed crackers, US export capacity and ethane vessels has limited European uptake. Yet flows are increasing. Europe has imported around 180,000 t/month of US ethane this year, steady from 2023 but 12pc more than in 2022, Kpler data show. The US has been shipping 750,000 t/month since 2023, more than triple the 2017 volume. US ethane prices meanwhile keep falling as supplies keep growing. European producer Ineos is due to open Europe's largest cracker in Antwerp by 2026, a 1.4mn t/yr ethane-fed unit. Other investments in new ethane-fed capacity could emerge, or in conversions of crackers. The challenge of getting the ethane over the Atlantic may prolong plans to increase its use in Europe, but it is likely to arrive in increasing volumes and probably join swelling naphtha supplies, potentially reducing LPG's appeal among producers looking to regain their competitive edge. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more