Allow me to summarize Altagas Q2 .
Propane exports; (Ferndale and Ripet). 1)
| | Ist qtr | 2nd Qtr | YTD |
| Ferndale(as of June30) | |
| Vessel loads | 6 | 7.75 | 13.75 |
| EXPORTs (Barrels) | 3,133,623 | 4,041,914 | 7,175,537 |
| Ebitda (partner) | 10,875,502 | 12,136,186 | 23,011,688 |
| Ebitda (altagas) | 30,953,353 | 34,541,453 | 65,494,806 |
| Current tput(bbls/day) | | 50,688 | |
| | | | | |
| RIPET(as of June30) | Ist qtr | 2nd Qtr | YTD |
| Vessels loads | 8 | 7.25 | 15.25 |
| EXPORTs (Barrels) | 4,138,858 | 3,721,659 | 7,860,518 |
| Ebitda (partner) | 16,574,141 | 12,893,763 | 29,467,905 |
| Ebitda (altagas) | 38,672,997 | 30,085,448 | 68,758,445 |
| Current tput(bbls/day) | | 41,453 | |
| | | | | |
2)As predicted , Ferndale has exceeded Ripet exports in Q2. This makes logical sense for several reasons;
*Several oil refineries located near Ferndale allowing low cost propane and butane ship via pipe to the Petrogas Ferndale terminal.
*Oil refineries are running at capacity versus last year pandemic levels
*pipeline excess to oil refineries is the lowest cost versus CNR rail transport.
*shipping Canadian propane to FERNDALE is also cheaper via southern route versus northern route to PR.
*No port logistics issue since FERNDALE wharf is owned by ALTAGAS.
3).Butane is being shipped from FERNDALE . Butane is about 10% more expensive than propane. The following ships transported ¼ vessels loads of Butane in Q2…..Tucana,Messina,Hisui,Constitution.
4)As mentioned in the Q1 Altagas news release the Q2 propane spread was $24.27, In Q1 , Altagas reported a spread of $26.07. This difference will have a negative impact on EBITDA for Q2. I have accounted for the spreads in the above tables.
5)Total Propane Volumes as GunnerG mentioned are higher for Q2 than Q1. This is a positive to EBITDA .
Looking Forward at the Propane market:
1)FEI . The price for propane in the Far EAST continues to be very strong. In fact, the expected summer dip in the contract price did not occur. This indicates strong demand . These higher contract prices will start to impact ALtagas Q1-2022 numbers.
Feb 2021 contract price 544usd/tonne
Sept 2021 contract price 672usd/tonne
2)I am not sure if people followed Pembina proposals for Watson’s Island. Pembina suggested further expansions to their terminal and in addition the inclusion of exporting butane from Watson. This indicates strong Far EAST markets.
3)I am going to predict a new partnership with Pembina and Vopak on the new tank farm that is being proposed for Ridley Island. I expect some announcements on the tank farm in the Fall of 2021.
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Gas Processing:
I expect a good quarter for this sector for the following reasons:
1)Natural Gas pricing remains high currently at 3.60 usd/mcf. Extreme weather (winter and summer) , LNG exports and lower than usual gas stocks support prices at the 3.60 usd level.
2)Storage injection ending Jul2 was 16 bcf. This was well below the 5 year average of 63 bcf.
3)For the week ending Jul2, total gas storage was 2574 bcf which is 190bcf lower than the 5 year average and 551bcf lower than last year’s level.
4)In general the average rate of injections into storage so far in the refill season April to October is lower by 17% compared to the 5 year average.
5)Added processing at Townsend and North Pine will contribute to this quarters number compared to last year’s quarter.
6) These metrics are telling us that the gas processing should be running near full utilization except where normal maintenance is occurring.
Looking Forward at the Natural Gas market:
Prices should remain high for at least another quarter due to rising LNG exports and relatively flat natural gas production. Export growth is expected to flatten and gas production from oil directed fields is expected to increase latter this year. This should assist the gas processing sector to perform well in the 2
nd/3
rd and 4
th quarters of this year.
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Utilities 1) This is summer and Q2 numbers should contain no big surprises. However, there are 2 rates increases that should positively impact ALTAGAS…WGL effective on Mar21 and Apr21.
2)MVP. This pipeline continues to struggle with the water permits. EPA is not recommending the stream crossings in the Upper Roanake watershed which is roughly 1/3 of the stream crossings needed to complete the project. The economics of the pipeline is tenuous at best due to the cost overruns.
3) No Green initiative announcement yet. Waiting for US federal legislation is not a good idea.
GLTA
RFGUY.