Calgary firm purchases gas export terminal near Ferndale

Deal could lead to increased exports of propane, butane to Asian markets


Petrogas export terminal near Ferndale

This aerial view shows two storage tanks on property in the 3900 block of Unick Road near Ferndale, recently purchased by Petrogas Energy Corp. for $242 million. The facility will be used to export propane and butane, the byproducts from nearby oil refineries.


A butane/propane export terminal near Ferndale that has remained under the radar for decades has been purchased for $242 million, an indication of significant changes taking place in global energy markets.

Last week Petrogas Energy Corp. closed a deal to purchase the storage and distribution facility at the end of Unick Road from Chevron. According to documents filed at the Whatcom County Treasurer's Office, the sale of about 42 acres of property equates to slightly more than $4.1 million in local and state excise taxes. It is one of the largest taxable transactions ever filed in this area, said Whatcom County Treasurer Steve Oliver.

The sales price includes a large set of intangibles beyond the property itself, including ancillary assets, inventories, contracts and other considerations, said Stan Owerko, president and CEO of Petrogas Inc., which is based in Calgary, Canada. Petrogas Inc., along with Calgary-based AltaGas Ltd. and Idemitsu Kosan Co. Ltd. of Tokyo, are the companies that hold a majority stake in Petrogas Energy Corp.

One reason for the high interest for this property is the lack of such a facility in the region. According to the website for RBN Energy (, which delves into energy markets, the Ferndale facility is the only functioning facility on the West Coast. Earlier this year the Port of Longview announced plans with Haven Energy to build a $275 million facility.

The nearly four-decade-old Ferndale facility is next to Alcoa's Intalco Works aluminum smelter plant and uses Alcoa's dock. The terminal currently gets most of its butane and propane from Whatcom County oil refineries, but at times it also comes by rail from the central U.S. and Canada, Owerko said. The dock itself has an aquatic license that limits the amount of time it can be used, Owerko said, and that is something Intalco and the Ferndale export facility can negotiate with each other.

With increased interest in exporting butane and propane to markets outside the U.S., a property like this one is a valuable commodity. Construction of these facilities are not only expensive to build but can take a long time to get permitted, said Callie Mitchell, author of an article on the Ferndale facility that can be found at

"The fact that Ferndale already has the necessary permits is a big advantage over terminals that must be permitted and built from scratch," Mitchell said in an email.

Mitchell said she would expect the sale to result in an increase in rail traffic from the central U.S. and Canada. For years, the Ferndale facility was exporting surplus butane to offshore markets, primarily to Asia.

Owerko said if Petrogas is able to expand beyond what the local refineries offer, the company would augment it with more propane and butane from other areas. The use of rail would be small compared to the traffic from the local refineries to bring in crude oil, he said.

The Petrogas terminal would not be used to export coal or oil.

Propane and butane are a byproduct of the oil refining process, so working with the Whatcom refineries is an important part of the business plan for the Ferndale terminal. If the refineries aren't selling the gases to the Ferndale facility, the other options are to burn it off through flaring, send it off by rail to another part of the country for storage, or to cut back on refining.

"We look forward to working closely with the area refineries on this," Owerko said.

As for the transportation of butane and propane by rail, he acknowledges it is a volatile product but said transportation of it has been done longer than crude oil, particularly the Bakken crude, so equipment has been engineered to better handle it in case of an accident.

Mitchell added that propane and butane are transported in specially built rail cars designed to handle the higher pressures of these products.

"No form of hydrocarbon transportation can be 100 percent without risk. But propane and butane rail shipments have a very good track record," she said.

Exporting propane and butane to Asian and South American markets from Ferndale is a strong opportunity for Petrogas Energy Corp., Owerko said.

The Ferndale facility is an opportunity to supply the Asian and South American markets with a cleaner energy source than coal, Owerko said. That's particularly important to China, which is looking for ways to deal with air pollution.

The facility currently has two tanks, and Owerko said they would look at the possibility of adding more tanks if market demand is there. That also would mean more employees. The facility currently employs 15 people.

Exporting butane and propane has become a bigger deal as a result of the increased oil production in the U.S. and Canada. Mitchell expects the additional propane and butane would be used in fuel markets, replacing coal, and in other applications.

The Ferndale terminal currently has the capability to handle exports and imports of 30,000 barrels a day. That's a small portion of demand - Mitchell said in the next five years, the Asia/Pacific region demand is expected to grow by 2.5 million barrels per day.

"So Ferndale will only make up a very small piece of the supply necessary to meet this growing demand," Mitchell said.

Owerko said he expects the ownership switch to be a smooth one, with no significant changes right away while they evaluate what they have with the Ferndale terminal.

"Our objective is to be good business partners with the community," Owerko said. "It's a beautiful area."

Reach Business Editor Dave Gallagher at 360-715-2269 or Read the Business Blog at or get updates on Twitter at @bhamheraldbiz.

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