Officials from Pembina Infrastructure and Logistics made their first public appearance in front of Prince Rupert mayor and council this past Monday, June 12 during a regular council session, and told council members that a final investment decision is “a matter of months away” for its proposed liquid propane export terminal on Watson Island.
Speaking to council were three members of a delegation from the primarily western Canadian company that travelled to the North Coast for the occasion.
Stu Taylor, senior vice-president of NGL (natural gas liquids) and natural gas facilities, Joel Zaleschuk, senior manager of business development in NGL and Tanis Fiss, senior representative for government affairs, introduced themselves to council and gave a brief overview of the $125-$175 million facility that would be located on city-owned Watson Island land, taking a portion of the former Watson Island pulp mill site, which is to be fully decommissioned this fall.
“We’ve grown dramatically over the last few years and our reason for being here and looking for opportunities for propane export is we just completed about $5 billion in capital expenditures,” said Taylor. “We’ve increased our fractionation capacity – fractionation separates the mix of hydrocarbons into its various components – all of those assets come into service in 2017 and 2018 … We’re looking for additional markets for some of those products, particularly propane.”
The team explained that the facility is smaller than a typical similar export project.
“It’s a very small, niche type of project and that’s why we think we can be successful with it,” said Zaleschuk.
“It’s smaller in size – 15,000-25,000 barrels per day of capacity. The key for us is a much smaller capital cost than traditionally what’s out there in a marine export terminal for LPG,” he said, adding that he doesn’t see the terminal as competition for other LPG or LNG projects proposed for the region, but complementary.
“The footprint within Watson Island is quite small relative to the land that’s available … we hope this presents an opportunity both for ourselves and for the city to put additional projects in,” Zaleschuk said.
A final investment decision from Pembina Infrastructure and Logistics (a subsidiary of Pembina Pipeline Corporation) is months away, said the team, but that the company must also secure the completion of various engineering studies, environmental and geotechnical work on Watson Island, inspecting the dock to ensure it can meet the project’s needs, as well as permits from the provincial and municipal governments for lands, subdivision and safety compliance. The company is in discussions with the Port of Prince Rupert and the Pacific Pilotage Authority for navigation assessments. Taylor said the company will look for an FID as early as when the engineering studies are complete during the next few months.
During operation, CN Rail would bring 28 cars to Watson Island per day, stage the rail cars on the island and through storage spheres to hold the propane under pressure. Reaching a 20,000 barrel per day threshold would load one VLGC (very large gas carrier) vessel per week. The company plans to service markets in North America, South America and possibly Asia.
“Unlike a traditional project where there’s a large operating cost to liquefy the propane below 42 C, all of that liquefaction happens as the propane is loaded onto the vessel by the marina operator,” Zaleschuk added.
Fiss dove into the rail safety history that the company boasts, which is an award-winning one, she said.
“Because what we’re proposing here at Watson Island is essentially a rail terminal we just wanted to point out the safety in regards to handling with rail … We have a relatively new fleet of cars (average age is six-years-old) We shipped almost 40,000 rail cars in 2016,” she said.
Zaleschuk added the rail car fleet fits current safety specifications in Canada and the U.S. and “are all largely brand new cars.”
The company plans to source much of its workforce and contractor and sub-contractor work from the local area, holding job fairs in the communities surrounding the project in the future, including Prince Rupert.
“We have undertaken, with the First Nations communities, a job training program. So we have made an effort recognizing that in a lot of cases, these are under-skilled employee opportunities and so we’ve brought them onto our sites and trained them on our sites and have been very successful. This would follow that same program,” said Taylor. “We believe very strongly in hiring locally,” Fiss said.
“We believe in having face-to-face mutually beneficial relationships with the local and First Nations communities and we explore all opportunities to collaborate on community projects related to health, education, training, employment and business development that works for the local community as well as the aboriginal community.”
Pembina and Prince Rupert Legacy (a subsidiary of the City of Prince Rupert) signed a letter of intent to construct the facility in mid-April. City officials have frequently cited getting Watson Island back on the city’s tax roll as a main priority for council.