May 30, 2024 [Storage Terminals Magazine]- AltaGas Ltd. and Royal Vopak have reached a significant milestone with the positive final investment decision on the Ridley Island Energy Export Facility in British Columbia, Canada. REEF is a world-class liquefied petroleum gas and bulk liquids terminal that will further strengthen Canada’s position as a growing global energy exporter.

After a meticulous five-year environmental preparation and review process, as well as extensive engagement with Indigenous rights holders and local communities, the Joint Venture is now set to deliver a state-of-the-art export facility that will operate with industry-leading environmental stewardship.

The Joint Venture has successfully completed all major gating items, including the front-end engineering design and a detailed Class III capital estimate. Site clearing work is more than 95 percent complete, and with the necessary permits in hand, the project is expected to come online near the end of 2026.

The projected gross capital cost for the joint venture is $1.35 billion, excluding governmental incentives and support. This aligns with the Partners’ expectations, along with an annual partnership EBITDA of $185 million – $215 million. To minimise capital cost risk and community impacts, onsite work will be minimised, with approximately 90 percent of equipment, packaging, and pipes expected to be prefabricated offsite in controlled operating environments.

One of the key highlights of the project is the Joint Venture’s aim to lock-in more than 60 percent of the Phase 1 capital costs through fixed-price, lump-sum engineering, procurement, and fabrication contracts prior to construction. This provides a level of cost certainty and mitigates potential cost overruns.

Vopak and AltaGas will fund their 50 percent pro-rata ownership through each company’s respective financial capacity, maintaining a strong financial position without leveraging the partnership. This demonstrates their commitment to responsible financial management and ensures a sustainable approach to the project.

REEF is expected to play a crucial role in enhancing Canada’s position as a growing global energy exporter. It will strengthen Canadian and Asia Pacific energy connectivity and provide Canadian producers and aggregators with access to premium global markets for LPGs. With its strategic location, REEF offers a structural advantage in delivering LPGs to Asia, with only ten shipping days to the fastest-growing demand markets in Northeast Asia. This advantage, coupled with the facility’s focus on minimising maritime emissions, positions REEF as a competitive player in the global energy export market.

Importantly, the project has First Nations support agreements in place, showcasing the commitment to building positive relationships and driving economic benefits for local communities in Northwestern British Columbia. The construction activities will create job opportunities, and the long-term operation of REEF will continue to contribute to the economic growth of the region.

REEF will be constructed and operated under AltaGas and Vopak’s existing exclusive rights granted by the Prince Rupert Port Authority (PRPA) to develop LPG, methanol, and other bulk liquids exports on Ridley Island. This partnership further strengthens the collaboration between the two companies and ensures the successful realisation of the project.

The positive FID on REEF is a significant achievement for AltaGas and Vopak, as it enables them to continue connecting Canadian energy to Asian markets and drive valuable outcomes for their customers. It reinforces Canada’s structural advantage in delivering LPGs to Asia with the shortest shipping time and lowest maritime emissions footprint. By delivering a world-class export facility, AltaGas and Vopak are poised to create long-term value and contribute to the growth of the energy industry in Canada and the Asia Pacific region.

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