Canada's AltaGas and Keyera agree long-term LPG processing deals
07/02/2025 14:14
Feb 7 (Reuters) - Canada-based energy infrastructure
firm AltaGas ALA.TO and pipeline operator Keyera KEY.TO
entered into long-term agreements for processing liquefied
petroleum gases (LPGs) on Friday.
Keyera entered a 15-year tolling contract at AltaGas' Ridley
Island Energy Export Facility for 12,500 barrels per day (bpd)
of LPG export capacity.
In turn, AltaGas signed an 18-year agreement for 8,000 bpd
of fractionation capacity at Keyera's natural gas liquids (NGLs)
processing and storage facility in Saskatchewan.
U.S. President Donald Trump imposed and later suspended
tariffs on Canadian goods, including a 10% levy on energy
imports.
As a result, Canadian companies are looking to reduce
dependence on the U.S. by looking towards other markets such as
those in Asia.
AltaGas' Ridley export facility is expected to be
operational by the end of 2026, with the company saying that it
requires only ten shipping days to export to the LPG markets in
Northeast Asia.
The 18-year fractionation contract, which includes
processing of NGLs to be produced at AltaGas' Pipestone II plant
in Alberta, will provide long-term capacity for AltaGas'
production in Montney shale.
"These agreements strengthen the long-term growth and
predictability of cash flows for both companies and strengthens
Canada's link into key Asian markets," said Vern Yu, President
and CEO of AltaGas.
Tolling is a service contract where one company agrees to
pay a fee or toll to another to process raw materials into
finished product.
Fractionation is used to seperate raw natural gas into
individual substances such as methane, ethane, propane, butane
and natural gasoline.
"We see the announcement as slightly positive for both
companies' share prices, with the arrangements allowing each
party to lever off the other's infrastructure, and underpin
their respective growth projects with long-term contracts for
the projects' capacities," RBC Capital Markets analyst Maurice
Choy said.
(Reporting by Pooja Menon in Bengaluru; Editing by Sahal
Muhammed)
((Pooja.Menon@thomsonreuters.com;))