AltaGas advances global LPG export strategy

Canada-based AltaGas, as part of a joint venture with Japan’s Idemitsu Kosan Co., is increasing its ownership interest in Petrogas Energy and boosting its propane export capabilities by acquiring a facility about 100 miles north of Seattle.

AltaGas is indirectly acquiring an additional 37 percent of Petrogas’ equity for total consideration of about $715 million. The company’s indirect ownership in Petrogas will increase to about 74 percent, with Idemitsu owning the remaining 26 percent.

The agreement will allow AltaGas and Idemitsu to assume full ownership of Petrogas, one of the largest privately held midstream and logistics companies in North America with operations dating back to 1986.

“After operating Petrogas for nearly 35 years, I’m excited about what the future will bring for this company,” says Stan Owerko, Petrogas’ founder, president and CEO, who will continue as a consultant over the next 12 to 18 months.

Petrogas’ business is composed of four core divisions: LPG exports and distribution, domestic terminals, well site fluids and fuels, and trucking and liquids handling. The LPG exports and distribution, and domestic terminals are Petrogas’ largest segments.

Petrogas’ Ferndale terminal is an LPG export facility located on the U.S. West Coast near Ferndale, Washington, about 100 miles north of Seattle. Ferndale has refrigerated storage capacity and is pipeline connected to the BP Cherry Point and Phillips 66 Ferndale refineries.

AltaGas says the acquisition complements its Ridley Island Propane Export Terminal (RIPET) operations. Similar to the RIPET facility, LPG export volumes being shipped from Ferndale are delivered into various Asian markets.

“The Ferndale LPG export terminal … provides the same structural advantage related to reduced shipping days to Asian markets as RIPET, and has capacity to export in excess of 50,000 barrels a day of combined butane and propane,” says AltaGas President and CEO Randy Crawford. “Combined with AltaGas’ RIPET, our export capacity will increase to approximately 100,000 barrels a day, with the ability to ultimately achieve in excess of 130,000 barrels a day over the medium term once RIPET is increased to nameplate capacity.”

AltaGas says the acquisition will also provide the company with greater access to NGL supply and storage, including Fort Saskatchewan, Alberta, and expand its logistics capabilities.

Petrogas’ largest U.S. storage and terminal facility, located in Indiana, has two underground storage caverns for propane and butane. The facility is situated near several refineries and crude oil refined product tank farms, is pipeline connected to area refiners and chemical facilities, and has inbound and outbound truck and rail capabilities.

The transaction is expected to close in the fourth quarter of 2020 or the first quarter of 2021.

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