MaXfield Group Acquired by TerraVest Capital Inc.
On February 5, 2018 TerraVest Capital Inc. acquired all issued and outstanding shares of MaXfield Group Inc., a Calgary-based manufacturer of processing, storage, and transportation equipment for propane, anhydrous ammonia, and oil and gas markets. The acquisition cost $21.0 MM and is subject to a working capital adjustment.
TerraVest says it will use its reserve of cash and credit facilities to swing the deal. “MaXfield is a natural extension of TerraVest’s existing operations and solidifies the company as a leading manufacturer of equipment for the propane and anhydrous ammonia markets across Canada,” says Dustin Haw, CEO of TerraVest. “It’s also complementary to our existing Western Canadian operations.”
RIPET Provides New Market Access for Western Canadian Propane Producers to Asia
BC Premier John Horgan and his entourage donned hard hats to tour AltaGas’s construction site at Ridley Island.
AltaGas Ltd.’s northeast British Columbia Ridley Island propane export terminal (RIPET) is designed to create a hub for key global markets in Asia, provide new access to those buyers for Western Canadian propane producers and give them a longed-for shipping advantage, while handing them higher netbacks. The company estimates a load will take only 10 days by tanker to Asia, considerably less than the normal 25 days from the U.S. Gulf coast.
AltaGas is convinced that, as Canada’s first westcoast export terminal, RIPET gives producers a solid advantage. Construction is well underway and the facility is scheduled to be commissioned and in service in Q1, 2019. It’s designed for 40,000 bbl/d of export capacity (or 1.2 million tonnes/annum). All-in costs are estimated at $450.0 to $500.0 MM.
The project is being built on a brownfield site and includes an existing world-class marine jetty with deep water access, excellent railway access, which enables the efficient load of very-large-gas-carriers that can access key global markets.
Astomos Energy Corporation has signed an agreement to purchase half of all the propane shipped from Ridley Island. Most of those barrels will come AltaGas facilities and its new plants also under construction. Astomos, headquartered in Tokyo, Japan is a $91.0 MM (US) LPG company, established in 2006. It has three fields of activity: LPG import and distribution in Japan, a shipping business operating 21 vessels, and an international trading arm.
AltaGas expects that at least 40 per cent of RIPET’s throughput will be underpinned by tolling arrangements.
Last May, AltaGas and Royal Vopak, with headquarters in Rotterdam, Netherlands announced they had signed a strategic joint venture with the Dutch company taking a 30 per cent interest in the terminal. At the time, Vopak reported that Canada was one of its strategic focus areas and it wanted a piece of “this important export market.”
Last fall, British Columbia Premier John Horgan and his entourage toured RIPET, scheduled to come on-stream in early 2019. It will receive propane from BC and Alberta, transported by the Canadian National Railway’s existing line, to Prince Rupert.
“This is a first-of-its-kind project that opens the door to global markets for British Columbia, while creating good, sustainable jobs and economic development for the North Coast,” said Premier Horgan after his tour. “We’ll continue to enthusiastically pursue and support projects that benefit local workers, communities and Indigenous people, while protecting our air, land, and water.”
Pembina Pipeline Approves Prince Rupert LPG Terminal
In December 2017, the board of directors of Pembina Pipeline Corporation approved the development of its proposed liquefied petroleum gas (LPG) export terminal, located on Watson Island, BC, on lands leased from the city of Prince Rupert. The LPG will be shipped to markets in Asia and Central America. The company says the price tag for the project is estimated at $250.0 to $270.0 MM and is targeted to come into service in mid-2020, with a permitted capacity of about 25,000 bbl/d of propane.
“Since our initial announcement of potentially developing the Prince Rupert Terminal, we’ve worked diligently with municipal and other stakeholders and now are able to move forward with our final investment decision. We are very excited to progress the terminal as it will provide significant economic benefits to the Prince Rupert area, including 150 to 200 construction positions and, once operational, create between 20 to 30 full-time positions.”
The facility would receive shipments of propane via rail from the company’s Redwater facility, north of Edmonton, Alberta. Initial plans are that it would be unloaded, chilled, and stored for up to 15 days in above-ground, refrigerated holding tanks, before being loaded to a propane ship for export to global markets. The company estimates it may need two-to-three vessel shipments every month.
Pembina says its responding to the rapidly expanding propane production in Western Canada and the United States, in the past few years, as more producers are tapping into shale formations. It is a by-product of shale natural gas production domestic producers have been hunting for new markets since this country’s propane lost some of its market share to growing U.S. supplies in key petrochemical markets.
Pembina Pipeline plans LPG export terminal on Watson Island, near Prince Rupert, B.C.
CPA Calls for Nominations: Deadline March 31, 2018
The Canadian Propane Association (CPA) is reminding everyone of its biennial awards, to be given to the deserving recipients at its June 6, 2018 gala in Ottawa. The program committee have added two new awards – health and safety as well as innovation – to its lifetime industry achievement and PIT trainer recognitions.
The health and safety award, the CPA reports, “is given to leading initiatives by companies or individuals in the propane industry who demonstrate a successfully implemented new program or an improvement in an existing program to promote, support, and enhance a healthy and safe workplace environment.” The innovation award will go to “individuals or organizations outside of the CPA membership that have contributed to the advancement of the industry in areas of product innovation, process/technology, market development or marketing/communications.”
The committee needs all nominations by March 31, 2018. Questions? Please contact Tammy Hirsch, CPA’s senior director of marketing and communications at tammyhirsch@propane.ca.
Welcome to Darren Cunningham, CPA’s New Director, G.R. West
The CPA welcomed Darren Cunningham as its new director, government relations, western Canada. He brings more than 15 years of experience in communications and public relations, and a strong background in public policy. He has a degree in political science, has held various senior roles in the federal and provincial governments, in G.R. with Shaw Communications, and with his own company, Level Public Affairs.
Cunningham will work with CPA members across B.C., Alberta, Saskatchewan, and Manitoba and assist them to build and maintain relationships with all levels of government, regulatory authorities, and stakeholders. He can be reached in the Calgary office at darrencunningham@propane.ca.
Ontario Lobbies for Waiver to Hours of Service Regulation
The CPA has worked long and hard with the federal and provincial government about the possibility of obtaining a waiver to the Hours of Service regulation (Ontario Regulation 555/06) for member companies that may require one. The CPA reports, “Propane delivery in parts of Ontario has bottlenecked due to a recent period of extreme cold weather combined with treacherous driving conditions, road closures, and trains running smaller loads that are causing backlogs.”
Under Highway Traffic 555/06, companies can have trucks on the road for 13 hours a day, but due to extreme weather conditions and other considerations, drivers have less hours per day to meet increased demand. This has left some customers with a sense of unease, during times of frigid temperatures. The United States has enacted a system to exempt drivers in periods of emergency from the hours of service provisions in certain states. Superior Propane and WestCan Bulk Transport have shown the CPA an exemption used by the fertilizer industry that is limited to spring and fall annually, that companies use with “proof of driver fatigue provisions.”
Carriers must put forward a solid rationale for requesting a waiver, including:
• Why the waiver is necessary;
• The risk of not issuing a waiver;
• What other measures the carrier has tried to alleviate the situation within current hours-of-service parameters;
• How it plans to mitigate the safety risks taken by extending hours;
• The specific time frames (e.g. from January X to March X); and
• The geographic locations where the waiver is needed.
The CPA advises these requests should to be addressed to: Sean Doussett, Deputy Registrar of Motor Vehicles, Ontario Ministry of Transportation, 3rd floor, 301 St. Paul, St. Catherines, ON L2R 7R4.
Pricing + Transportation Access for Pipeline Shippers
In an interesting union, Airlines for America (AAA), the trade organization of U.S aviation companies, and the National Propane Gas Association (NPGA), filed a joint Petition for Rulemaking at the Federal Energy Regulatory Commission (FERC) “requesting the agency extend its affiliate Standards of Conduct regulations to the multi-production pipeline industry.”
According to their joint press release, during the past several years, “the development of new technologies has increased the production of crude oil and associated petroleum products, with estimated production of crude rising to a record-setting 10.3 million bbl/d in 2018,” quoting facts from the Energy Information Administration. Additionally, they believe, there has been a dramatic increase in domestic natural gas liquids (NGLs) production, due to advances in shale oil and gas development.
“This has resulted in an accompanying boom in production, the multi-product pipeline industry has gone through unprecedented restructuring, spinning off midstream transportation and storage assets, and engaging in the marketing of these products through companies affiliated with the pipelines,” the AAA and NPGA charge.
Furthermore, they add, public information indicates that crude oil, NGL, and petroleum pipelines appear to have “engaged in offering preferential, discriminatory rates to their marketing affiliates, not offered to non-affiliated shippers, and shared non-public transmission information with affiliated marketing entities. Such abuses violate the Interstate Commerce Act (ICA), the law intended to ensure that common carriers, including crude oil, NGLs, and petroleum product pipelines, treat all shipper equally in terms of transportation and price.”
“Propane marketers and consumers rely upon liquids pipelines as an essential part of the supply chain that heats homes, businesses, and farms,” says Jeffrey Petrash, vice president and general counsel for the NPGA. “Our marketers and consumers need to have increased confidents that markets operate freely and efficiently, if our proposals are adopted by the Commission. The NPGA represents approximately 2,800 companies (including producers, wholesalers, transporters, and retailers as well as the manufacturers and distributors of propane equipment and appliances).
“Will billions of gallons jet fuel shipped and consumed annually, the U.S. airline industry has a vested interest in ensuring that interstate pipelines provide reliable, cost-effective jet fuel transportation,” says David Berg, senior vice president and general counsel for AAA. AAA represents $1.5 trillion in U.S. economic activity and more than 10 million jobs.
Ensuring the Energy Transition Leaves No Worker Behind
In January 2018 world and business leaders met in Davos, Switzerland for their annual gabfest. One topic that generated a lot of discussion was how to help employees continue to work, as the world transitions from fossil fuels to a low emission future. Naturally, it was hosted by the renewable energy sector.
The still tiny U.S. solar industry generated 2.5 times the job than the fossil fuel industries. The number of solar employees increased by more than 51,000 workers (2016 figures), up 25 per cent from 2015. This compares to the energy jobs – mostly in coal — that are decreasing, reports the International Renewable Energy Agency (IRENA). “Unfortunately, in an economy that places a higher value on solar, wind, energy storage, electric vehicles, and countless other forms of innovation,” there is not always a match between the loss of coal jobs and the increase in clean energy positions.”
“We must remember and honour the fact that our industrial age was built on the backs of coal miners from Appalachia,” says Mary Anne Hitt of the Sierra Club, which released a report entitled Beyond Coal. It stresses the importance of working with communities historically dependent on the fossil fuel industry for employment through all stages of the transition to clean energy.
“We must open markets first to ensure these workers have jobs to go to,” says Brandon Dennison, founder of the Coalfield Development Corporation, based in West Virginia. His company works with unemployed, formerly well-paid workers who have been ousted from ‘dying industries.’ His company has identified five growth markets in that state including: agriculture, green collar construction (including rehabilitation and energy efficiency), solar, mine land reclamation, and entrepreneurship in arts and culture. “There’s plenty of funding for training programs,” Dennison adds, “but the key to sustainable jo creation for a market that puts wages in pockets and allows people to be empowered to produce for their society.”
Dennison and his partners have developed a formula for their programme – 33 hours/week of paid work, six hours of community college study, and three hours of life skills. Most of these miners used to operate large, complex pieces of equipment. When you add their maintenance and operational skills, coupled with the fact many are licensed electricians, many are hoping to be hired into the solar industry.
Dennison warns that, as we transition to a low-emission future, we need to be honest about the fact the coal industry is not coming back. “Rather than debating if the industry is good or bad for the environment,” he says, “we need to speak in economic terms, looking toward investment and business for the future.”
Once the activists have closed the coal industry, they’ll turned their eyes on other “fossil fuel opportunities” and this is perhaps the model they’ll follow.
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