Petrogas Energy Corp. is pleased to announce that it has entered into a binding agreement with Chevron USA Inc. ("Chevron") for the purchase of Chevron's Ferndale, Washington storage and distribution facility for bulk shipments of propane, butane and iso-butane (collectively "LPG"). The transaction price is confidential and the purchase is subject to usual government and regulatory body approvals with a closing date expected to be on March 31, 2014. The Ferndale Terminal acquisition provides a strong fit for AltaGas Ltd. ("AltaGas") and Idemitsu Kosan Co. Ltd. ("Idemitsu"), who recently acquired interests in Petrogas, providing AltaGas with direct offtake for their proprietary production and for Idemitsu to acquire North American LPG for its LPG sales and distribution infrastructure in Japan as well as its other interests in southeast Asia.
The Ferndale Terminal has the capability to handle exports and imports of up to 30,000 barrels a day of LPG and has facilities to handle and supply propane to the regional market for US domestic consumption. The Ferndale Terminal has rail, truck and pipeline capability and is connected to two local refineries offering LPG balancing services.
Commenting on the transaction, CEO Stanley Owerko noted that recent market and logistical developments have led many Western Canadian producers to seek alternative outlets for their production. The Cochin Pipeline, originating in Edmonton, Alberta and terminating in Sarnia, Ontario has been a strategic outlet for Western Canadian propane production since the 1970s, having the capability to handle up to 50,000 barrels a day of propane. The recent decision to take the Cochin pipeline out of propane service and to convert it to a diluent pipeline has left Western Canadian producers in a difficult position for managing their production. "Petrogas is well positioned to provide additional takeaway capacity with its recently expanded Ft. Saskatchewan Terminal, providing an outlet for increasing LPG production in the Western Canadian sedimentary basin."