Viewpoint: Canadian propane exports set to rise in 2022

Propane exports out of Canada are expected to rise in 2022 and upcoming years as more export capacity is expected to come online.

Growth in Canada's west coast export capacity will be lead by expansions by AltaGas and Pembina at their current terminals. At least 30,000 b/d of additional capacity, combined with growing petrochemical demand, is expected in 2022. Another 30,000 b/d of export capacity is possible within the next few years.

AltaGas plans to expand its Ridley Island (Ripet) propane export terminal in British Columbia to 80,000 b/d in the upcoming years. AltaGas started propane exports through Ripet in May 2019 at 40,000 b/d and increased exports to 58,000 b/d during the third quarter of 2021. AltaGas also exports up to 50,000 b/d of propane and butane via the Ferndale terminal in Washington state.

Pembina is considering an expansion of its 25,000 b/d Prince Rupert export terminal in BC to 45,000 b/d. The company expects to make a final investment decision in the first quarter of 2022.

At the same time, the start up of a new propane dehydrogenation (PDH) unit will bolster domestic demand. Inter Pipeline (IPL) is making progress on construction of its 525,000 t/yr Heartland Petrochemical Complex (HPC) in Alberta, which is on track to start operations in the second quarter of 2022. The Heartland facility will consume 22,000 b/d of propane at the new PDH unit and derivative units to produce 525,000 t/y of polypropylene.

Railed propane exports to the US are expected to remain steady or decrease slightly as higher prices in Asian markets might draw more barrels for seaborne exports. Canada's railed and seaborne propane exports rose this year with railed propane exports to the US averaging 126,000 b/d in January-October compared with 100,000 b/d in January-October of 2020. About 40,000 b/d are shipments to the US west coast with majority being re-exported to Asia via the Ferndale terminal.

Expectations for an increase in demand comes as propane production in Alberta continues to grow with natural gas output, supported by higher commodity prices. Propane production in Alberta averaged 179,000 b/d in January-October 2021 compared with 163,000 b/d during the same period in 2020. Production is expected to continue to grow in 2022 as producers set higher output targets for next year.

By Yulia Golub