May 3, 2023 [Vopak] – Royal Vopak (“Vopak”) (XAMS: VPK) and AltaGas Ltd. (“AltaGas”) (TSX: ALA) are pleased to announce the execution of definitive agreements for a new 50/50 joint venture to further evaluate development of the Ridley Island Energy Export Facility (REEF), a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with marine infrastructure on Ridley Island, British Columbia, Canada.
REEF, as part of the previously submitted regulatory filings (under the name of Vopak Pacific Canada), will have the capability to facilitate the export of LPGs, methanol, and other bulk liquids that are vital for everyday life. REEF has been granted the key Federal and Provincial permits to construct storage tanks, a new dedicated jetty, and rail and other ancillary infrastructure required to operate a state-of-the-art and highly efficient facility. REEF would be developed on a 190-acre (77 hectare) site on lands administered by the Prince Rupert Port Authority for which the joint venture has executed a long-term lease that sits adjacent to AltaGas and Vopak’s existing Ridley Island Propane Export Terminal (RIPET), which has been in operation since April 2019.
Should REEF reach a positive final investment decision (FID), it is planned to be developed and brought online in phases. This approach will provide the most capital efficient build out of the project, match energy export supply with throughput capacity, mitigate the challenges that large development projects can have on local communities, and provide local construction and employment opportunities that would extend over longer time horizons. AltaGas has executed a long-term commercial agreement with the joint venture for 100% of the capacity for the first phase of LPG volumes, subject to a positive FID. AltaGas will also be responsible for the construction and operational stewardship of the facility. Future phases of the project will be developed as additional long-term commercial agreements and critical milestones are achieved to deliver the maximum value for all stakeholders.
Vopak, AltaGas, and the Prince Rupert Port Authority have been working closely with First Nations rights holders and key stakeholders, including the local communities in Northwestern British Columbia and the Federal and Provincial regulators, to deliver a project that will operate with industry-leading environmental stewardship and bring the strongest benefits to all parties involved. Key determinations and permits have been received from the Federal Government and an Environmental Assessment Certificate has been received from the British Columbia Provincial Government.
REEF Benefits from Structural West Coast Advantage to Asian Markets
With only ten shipping days to the fastest growing demand markets in Northeast Asia, REEF will be able to efficiently connect Canada’s vital energy products to the world. This includes having an approximate 60 percent base time savings over the U.S. Gulf Coast, which requires a minimum 25-day shipping time to Northeast Asia, and approximately 45 percent base case time savings over the Arabian Gulf, which requires a minimum 18-day shipping time. This geographic advantage expands when there is significant congestion in the Panama Canal or when other global shipping pinch points experience disruptions. Furthermore, the Port of Prince Rupert provides REEF year-round ice-free operations and has the deepest natural harbour in North America, leaving it able to accommodate the world’s largest vessels, which ensures safe and reliable market access and allows AltaGas and Vopak to efficiently connect upstream and downstream markets.
Joint Venture is Targeting Advancement of Critical Workstreams Over 2023
REEF is currently working through front end engineering design (FEED) activities, where deliverables will include a refined capital cost estimate, a project execution plan, a construction schedule, and a projected in-service date, among numerous other items. FEED and other development activities are expected to be completed by late 2023, followed by an FID by the joint venture. Solidifying long-term economic rail agreements in partnership with the rail operator will also be key for the joint venture to be able to reach a positive FID and ensure the project advances, and, in turn, delivers the strong benefits to the joint venture partners, First Nations rights holders, the Prince Rupert Port Authority, local communities, upstream and downstream customers, and other key stakeholders.
Vopak and AltaGas are excited to further evaluate the development of REEF and build on the strong partnership between the two companies, under this new joint venture agreement. Vopak and AltaGas thank all stakeholders for the continued embracement and ongoing partnerships as part of this project. Working with stakeholders and seeking strong partnerships is part of both organization’s individual and collective DNA and is engrained in how Vopak and AltaGas approach their businesses every day.
“We are excited to build on our success with AltaGas in Prince Rupert”, said Dick Richelle, Chairman of the Executive Board and CEO of Royal Vopak. “Our goal is to create together with partners high quality critical infrastructure for vital products. The strategic location of Prince Rupert, with the shortest shipping distances between North America and Asia, has the potential to increase the trade between Canada and the Asia Pacific region. REEF fits very well within Vopak’s strategic pillar to grow in gas and industrial infrastructure. We look forward to further collaboration with First Nations rights holders and key stakeholders to make this project a reality.”
“We are excited to execute this agreement and continue to advance our relationship with Vopak, the Prince Rupert Port Authority, First Nations rights holders, and the local communities surrounding Prince Rupert” said Randy Crawford, President and CEO of AltaGas. “Canada has a structural advantage in delivering LPGs into Asia from its world class resources and through the shortest shipping time and lowest maritime emissions footprint. AltaGas delivers more than 12% of Japan’s propane and 12% of South Korea’s LPG imports through connecting our valued upstream customers with key downstream markets in Asia. REEF fits our corporate strategy of operating long-life infrastructure assets that connect customers and markets and provide resilient and durable value for our stakeholders. We look forward to working with all our partners to achieving the remaining milestones required to reach a positive FID on the project.”
“We congratulate Royal Vopak and AltaGas on this significant milestone towards advancing development of the terminal project at the Port of Prince Rupert” said Shaun Stevenson, President and CEO, Prince Rupert Port Authority. “Once operational, the new facility will substantially increase and diversify the Port of Prince Rupert’s liquid bulk cargo capabilities and capacity, while providing a much-needed export solution for Canadian producers during a critical time in the global energy transition.”
“We commend Vopak and AltaGas on their efforts to-date on building long-term relationships with our community,” said Chief Harold Leighton, Metlakatla First Nation. “We are excited with the potential this joint venture project provides to our area and the Metlakatla First Nation.”
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