Pembina makes plans for propane shipment terminal at Watson Island

Pembina Pipeline is exploring the
prospect of building an LPG shipment
terminal at Watson Island
(photo from Pembina website)

Should they gain final approval from their board and required regulatory approvals, Pembina Pipeline could become the first company in a number of years to put some roots down on Watson Island, with the Alberta company announcing plans today to develop a propane shipment terminal at the former pulp mill site.

In a press release issued this morning, the Calgary based energy company outlined the agreement that they have reached with Prince Rupert's Legacy Corporation, with Pembina signing a non-binding Letter of Intent with Legacy Inc. as they explore their terminal plans.

As part of the LOI, Pembina has commenced site assessment and engagement with key stakeholders, including aboriginal communities as they look to move forward with the development.

After an initial assessment of the Watson Island site, Pembina came to the decision that the location is an ideal spot for the development of the proposed export terminal which would have the capacity of approximately 20,000 barrels per day of LPG export, the estimated capital cost or the proposed terminal has been set a between 125 million and 175 million dollars.

The project is subject to completion of design and engineering requirements, the energy company entering into appropriate definitive agreements, the receipt of necessary environmental and regulatory permits and the approval of Pembina's Board of Directors.

A timeline for the development is estimated at two years from whenever a Final Investment Decision is made, no details were released as to how many workers would be required to construct the shipment facility, nor how many would be needed once it is put into operation.

Stuart Taylor, the Senior Vice-President for NGL and Natural Gas Facilities, observed as to how Watson Island fits into Pembina's export plans.

"Watson Island has promising potential as an LPG export terminal location,"  ..."In light of our plans to develop a world-scale polypropylene production facility, the smaller export facility we are contemplating for Watson Island – utilizing smaller ships and ensuring very competitive per-unit export facility costs – makes good sense for Pembina."

The company also notes in their information statement today that they have already secured a long term export permit for shipment of LPG out of Canada.

Pembina has been seeking a location for an export terminal on the West Coast for a number of years, we first took note of their interest in the North Coast with this item from March of 2013.

The Watson Island project, should it move forward, would be the second LPG terminal to be built on the North Coast, AltaGas is currently in the process of constructing their own Propane export terminal at Ridley Island, that terminal will see propane arrive by rail car for shipment to export markets.

While Pembina is best known as a pipeline company, the media release from today does make mention of the benefits of the Watson Island location and the rail connections between Prince Rupert and Alberta.

"The location features a sheltered berth, existing dock adequate for activities associated with LPG export, as well as well-established rail connections between Redwater, Alberta and Watson Island, while also offering efficient shipping routes to Asian, North, Central, and South American markets. 

In support of this Project, Pembina has already secured a long-term export permit. The Company has been working towards the development of an LPG export terminal served by a national railway on the west coast of Canada for the past several years in anticipation of and response to the step change in LPG productive capability of the Western Canadian Sedimentary Basin"

You can review the full media release from Pembina here.

A range of video presentations on the Pembina website,  provides an idea as to the scope of the company and how Pembina may engage with the community as it moves forward with its Prince Rupert plans.

Watson Island could become a shipment point
for LPG in the years to come following
an announcement from Pembina Pipeline

So far, other than a short comment from the Mayor for the weekly newspaper, the City has not outlined any particulars related to the arrangement with Pembina.

For the City of Prince Rupert, the announcement from the Alberta energy company makes for a welcome and positive first step, providing the first glimpse of progress for the large parcel of industrial land that has been a significant drain on the city's resources in recent years.

Should the Pembina project move towards construction it would signal the rebirth of that industrial land as a revenue generating mechanism for the City.

You can review some of the history of Watson Island from our archive page here.

With the announcement of the Pembina plans, we have created an archive page in our Industrial Review section, updates on today's developments and future items related to the Watson Island plans can be found there.

Update: Mid-morning Tuesday, the City released its notes on the arrangement between Legacy Inc. and Pembina, you can review that information statement here.