All the export LPGs on the West Coast are in a tank in the middle of Washington State in somebody else’s name. So if you’re dreamin’ about LPG exports, the West Coast is a brand new game. Apologies to Larry Gatlin.
On March 4th, Petrogas announced the purchase of the Ferndale, WA LPG terminal, the only functioning butane and propane export facility on the U.S. west coast. Then last Thursday (April 10th) Sage Midstream announced a project to build another world scale LPG (liquefied petroleum gas) export terminal a couple of hundred miles south at the Port of Longview, WA. These are big developments for the west coast LPG markets. Today we begin a blog series that examines the history of Ferndale, how it has been used in the past, and what these two announcements mean for the future of west coast propane and butane markets.
Rusty and I both have a warm spot in our heart for Ferndale, having managed the commercial activities out of that terminal more than two decades ago when we were with Texaco. Ferndale is a 750MBbl storage, tank car, truck and waterborne import/export facility that sits near several Northwest area refineries, and is just a tank car ride away from some of the richest natural gas liquids (NGL) producing areas in North America. For most of its existence, Ferndale has been the backwater of NGL markets, almost exclusively used for butane exports to Latin America and the Asia/Pacific markets. But now NGL markets are changing dramatically due to the onslaught of new production from the shale revolution. And exports have become the market of choice for NGL surpluses. Up to now most of the action in exports has been along the Gulf Coast (see Sail Away), and to a lesser extent in the Northeast out of the Marcus Hook terminal (see Exports Prescribed for Propane Relief). But now attention is shifting to the West Coast.
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The two terminal deals described above are the biggest news to hit west coast LPG export markets in years. In the first, Petrogas Energy (a Calgary based NGL and crude oil marketing company) partnered with AltaGas (a major Canadian gas, power and utility company) and Idemitsu (Japanese energy major) to purchase Ferndale from Chevron. The deal is no surprise, since there have been rumblings that Chevron had been entertaining offers for the facility for many months. And on the buy side, Petrogas has been aggressively pursuing asset opportunities to help handle North America’s growing NGL surplus. Altagas and Idemistu have been open about the fact that one of their top strategies is to connect surplus Canadian production to Japan’s growing appetite for NGL’s. So from the perspective of the players, this deal certainly makes sense.
The ink was hardly dry on the Ferndale deal when Houston based Sage Midstream announced their project to build a competing facility just 200 miles south of Ferndale at the Port of Longview. We don’t know much about this one yet, except that the press release says the terminal will include a unit train accessible rail unloading facility, 550,000 barrels of storage, will have throughput capacity of 47 Mb/d and is expected to be operational by Q4 of 2016. We’ll provide more information on the Sage project as it comes available.
The Ferndale Terminal
Until the Sage project is completed, Ferndale is the only existing LPG export facility on the West Coast. Ferndale has been quietly exporting butane to Asia for many years – with volumes averaging 4 to 5 Mb/d over the past five years. That is typically two or three butane cargos per year either in the summer butane surplus season or leading up to it (This can involve emptying the tank in preparation for the butane surplus season. More on refinery butane surpluses below.)
Ferndale is a two tank above ground LPG storage facility with tank car, truck and waterborne terminalling located in Whatcom County, Washington just west of the small town of Ferndale (pop. 11,500) on the Strait of Georgia waters. It sits next door to and shares a dock with Alcoa’s Intalco aluminum smelter plant and both are close to four large oil refineries that have been around since the 1960’s. These refineries - BP Cherry Point (formerly ARCO), Phillips 66 Ferndale (formerly Conoco Phillips, Tosco, BP and Mobil), Shell Puget Sound (formerly Equilon and Texaco), and Tesoro (formally Shell) - together produce over 500Mb/d of a dozen different refined products. Over the years all of them have leaned on the Ferndale terminal to handle seasonal butane surpluses.
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