Posted on: November 9th, 2016
By R. Bruce Striegler
“We’re seeing some decline from the peak volumes we experienced a couple of years ago where we surpassed 20 million tonnes,” says Shaun Stevenson, Vice-President, Trade Development and Public Affairs at Port of Prince Rupert. He adds this is largely attributed to the decline in coal volumes. “But we’re still very strong as it relates to our intermodal business.” Stevenson notes that Prince Rupert continues to experience strong container volumes, with record volumes to the Fairview Container Terminal. “We’ve seen growth every year in the past nine years, except one. We’ve been the fastest growing container terminal in North America for most of that period.”
Don Krusel, President and CEO, Port of Prince Rupert, concurs, “Overall this past year, we’ve experienced positive growth in all sectors other than coal. Areas such as grain have been growing and all our facilities have been up in growth. Containers and wood pellets are all up. Our total tonnage may be down, but that’s mainly due to the fact that coal takes up such a large proportion of our export totals.”
Operating from a community of only 12,000 people, the reputation of the port has had an unusually large impact on global trade. The reasons start with the harbour’s geography, and the fact that it is the deepest natural harbour in North America. No other port can match Prince Rupert’s advantage of connecting North America to Asia Pacific, since it is one to two days closer to Asia than any other westcoast port. Ocean carriers use less fuel and experience more reliable performance following a shorter transit across the Pacific. Combined with CN Rail’s network, which offers premium reach into North America’s resource and consumer markets, Port of Prince Rupert has built on these advantages to create a track record of success.
Stevenson points to last year’s volumes, approximately 776,000 TEUs (twenty foot equivalent units). “That represents our strongest year since opening. At the same time, the container terminal is undergoing expansion right now. We’re about 75 per cent through, and when complete, this expansion will take us from an estimated 850,000 TEUs to a volume in excess of 1.35 million TEUs. We’re eagerly awaiting completion as we’re starting to see volumes approach capacity.”
Fairview Container Terminal expansion among highlights of 2015 port development
The Fairview Terminal expansion will see a second berth constructed, with Stevenson noting it is really a modest increase to the terminal footprint. Much of the earthwork for the terminal has been completed. “Our current cranes – we have four super post-panamax cranes, designed for the first phase of the terminal nine years ago for a 12,000 TEU ship, are running out of capacity. We’re now regularly handling 13,000 TEU ships.” The new terminal, the second berth and three new cranes are designed to handle 18,000 TEU ships. The new cranes will have a reach of 25 containers and be about 50 feet higher than the current cranes in the harbour.
“We’ve seen continued growth in container business, not only in volume, but also in diversification of ocean carriers bringing service to the port.” Stevenson says that while the port has enjoyed strong support from COSCO and the CKYH Alliance, last year both Maersk and MSC have launched new services which include Prince Rupert. “We’ve got other carriers that through slot charters have started to create a market presence at the port, like CMA or Evergreen. Last week ZIM announced a slot charter agreement with COSCO.” Stevenson said it was with a great deal of disappointment when the Port learned of the news of the financial challenges facing Hanjin Shipping. He says the issue is still working its way through the system. “Customers who expect service through the port have been impacted, and CN Rail, DP World and ourselves, have all been working together with the shippers to find alternatives.”
Canpotex Potash, after having completed detailed engineering and an environmental assessment, and after having received all its required permits, decided earlier this year not to proceed with its greenfield terminal development at the port. “We continue to have engagement with Canpotex as it relates to its future capacity needs. They’ve taken a step back looking at what the global conditions are for potash. It might be something that will be revisited, but we’re now looking at the lands for other purposes.” Stevenson also says there has been some recent dialogue around the Alaska Ferry Terminal. “They have to rebuild the terminal here. It was unfortunate that it got caught up in the issues surrounding funding from the State of Alaska to do the upgrade. I think there is a recognition by the Alaska Marine Highway system and the City of Prince Rupert that this is an important terminus for their operations and they are going to have to look at how they can proceed with that project.”
“We’re advancing planning for an integrated logistics park. And we’ve got a new rail-serviced lumber and forest products transload operation which just started operations in the past few months.” He says the transload facility will provide a compliment to other reload facilities located in Prince Rupert, and expands the opportunity for Canadian exporters to find their way into the system in Prince Rupert. Construction is about to get started on a $16 million maintenance and warehouse complex. This will be a replacement facility, the older original complex was lost in the transfer of property to DP World’s Fairview Terminal. The new complex will be comprised of two buildings; the first housing the maintenance facility, and the second providing storage and warehouse space. The contract for the design and construction of the facility was awarded to Coast Tsimshian Northern Contractors Alliance (CTNCA) in partnership with IDL Projects. Site clearing began in early September this year, with completion scheduled for next September.
LNG terminal decisions still forthcoming
As to anticipated decisions around a number of potential LNG terminals, Stevenson says, “Initially, there was a great deal of excitement and enthusiasm in B.C. for LNG, I think we’ve seen some cooling of that enthusiasm, given the decline in oil prices. I think that now there is a more pragmatic view of the opportunity for LNG in B.C., and I firmly believe that the Pacific Northwest LNG project supported by Petronas and others is still the most likely.”
Don Krusel, the Port Authority’s CEO, responded to the question of the impact of the long, complicated regulatory and environmental approval process. “Like so many trade infrastructure projects, the market conditions are in constant change and flux. When one adds to the normal process the steps involved with preliminary and final design, you end up with a long timeline from inception to construction and completion.
Among the early proponents vying for LNG terminals in Prince Rupert, WCC LNG, a corporation whose shareholders include ExxonMobil Canada Ltd. and Imperial Oil Resources Limited, has conducted preliminary investigative work on project concepts, but Stevenson says he is not aware of any other ongoing work. A second possible project involved the BG Group, but Stevenson points out that the BG Group has been acquired by Shell, and despite having a handful of agreements in place, ”There is some uncertainty as to Shell’s intentions at this point.”
The plan currently seen as the most viable and likely, Pacific NorthWest LNG, is a proposed natural gas liquefaction and export facility on Lelu Island within the District of Port Edward, but on land administered by Prince Rupert Port Authority. The lead partner on the proposed project is Petroliam Nasional Berhad (Petronas), Malaysia’s integrated oil and gas multinational, ranked among the largest corporations on the Fortune Global 500 list. Petronas, along with Sinopec, JAPEX, Indian Oil Corporation and Petroleum Brunei are all shareholders in Pacific NorthWest LNG and the associated natural gas supply. The facility would liquefy and export natural gas produced by Progress Energy Canada Ltd. in northeast British Columbia.
The first phase of the Project would include two liquefaction trains with an estimated output of 6 million tonnes/year (MTPA) per train, two LNG storage tanks, marine infrastructure, a material off-loading facility, administration and auxiliary buildings, and a bridge to Lelu Island. The Project would create up to 4,500 jobs during construction, 330 career jobs during operations and an additional 300 spinoff jobs in the community. Pacific Northwest recently completed its environmental assessment and has received federal approval and is reviewing the conditions of that approval with its partners. “We’re awaiting the final investment decision from Petronas, and are unsure as to its decision date. The company is currently examining the state of affairs globally before making that decision.” Pacific Northwest LNG and Petronas have engaged with all five bands of the Tsimshian, whose traditional territory the project is located on. They have agreements with four of the bands and dialogue continues with the fifth. Stevenson says that any proponent considering a development within the jurisdiction of Port of Prince Rupert is required to conduct consultations with the relevant First Nations and is required to provide accommodation to address their concerns.
Expanding the scope of the port’s cargoes
In May of this year, AltaGas Ltd. announced that its wholly owned subsidiary, AltaGas LPG Limited Partnership, had entered into a Memorandum of Understanding with Astomos Energy Corporation for the sale and purchase of Liquefied Petroleum Gas (LPG) from the proposed Ridley Island Propane Export Terminal. The new terminal would provide AltaGas and its suppliers with access to Asian markets and pricing for western Canadian propane. The AltaGas project is a diversification for Ridley Terminals, and Stevenson says that the company has conducted its feasibility and engineering studies, and is now in the midst of its environmental assessment. “We’re hopeful that will be concluded soon, so AltaGas will be in a position to make a decision to go forward with the project later this year.
“Last year we opened a new service for handling project cargoes into western Canada. It’s a very simple system we’ve developed but we believe we’ve unlocked a new opportunity for large western Canadian industrial projects. Our service is capable of handling modules arriving by ship into Prince Rupert which are then transloaded onto rail for destinations throughout B.C. and Alberta.”
Stevenson concludes the interview by commenting that, in the past, Prince Rupert has been viewed as an alternative on the West Coast. “From the outset, we’ve been considered a risk mitigation measure, if you will. But, over time shippers have discovered the efficiency of our system and as such, our volumes continue to grow faster than the overall marketplace has since we opened in 2007. There are certain issues that have accelerated our growth in market share, such as congestion issues along the westcoast, that have caused traffic to have been very sticky, and perhaps has given shippers an opportunity to experience the efficiency of the service, and we expect that traffic to remain with the port.”