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.

Canada's Pacific coast LPG terminals