AltaGas Stock

AltaGas Ltd. (AltaGas), an energy infrastructure company, connects natural gas and NGLs to domestic and global markets.

The company operates a diversified, lower-risk, high-growth energy infrastructure business that focuses on delivering resilient and durable value for its stakeholders.

The businesses of AltaGas are operated by the company and a number of its subsidiaries including, without limitation, AltaGas Services (U.S.) Inc., AltaGas Utility Holdings (U.S.) Inc., WGL Holdings, Inc. (WGL), Wrangler 1 LLC, Wrangler SPE LLC, Washington Gas Resources Corp., WGL Energy Services, Inc. (WGL Energy Services), and SEMCO Holding Corporation; in regard to the Utilities business, Washington Gas Light Company (Washington Gas), Hampshire Gas Company, and SEMCO Energy, Inc. (SEMCO); and in regard to the Midstream business, AltaGas Extraction and Transmission Limited Partnership, AltaGas Pipeline Partnership, AltaGas Processing Partnership, AltaGas Northwest Processing Limited Partnership, Harmattan Gas Processing Limited Partnership, Ridley Island LPG Export Limited Partnership, AltaGas Pacific Partnership, AltaGas LPG Limited Partnership, Petrogas Energy Corporation (Petrogas), Petrogas Holdings Partnership, and Petrogas, Inc. In the Corporate/Other segment, subsidiaries include AltaGas Power Holdings (U.S.) Inc., WGL Energy Systems, Inc. (WGL Energy Systems), and Blythe Energy Inc. (Blythe). SEMCO conducts its Michigan natural gas distribution business under the name SEMCO Energy Gas Company (SEMCO Gas).

AltaGas' operating segments include the following:

Utilities, which owns and operates franchised, cost-of-service, rate-regulated natural gas distribution and storage utilities that provide safe, reliable, and affordable energy to its customers. Prior to the close of the Alaska Utilities Disposition, AltaGas' Utilities provided energy to approximately 1.7 million residential and commercial customers in 2022 with an average 2022 rate base. The Utilities business also includes other storage facilities and contracts for interstate natural gas transportation and storage services, as well as WGL Energy Services, an affiliated retail energy marketing business, which sells natural gas and electricity directly to residential, commercial, and industrial customers located in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia; and

Midstream, which is a leading North American platform that connects customers and markets from wellhead to tidewater and beyond. The three pillars of the Midstream business include global exports, which includes AltaGas’ two LPG export terminals; natural gas gathering and extraction; and fractionation and liquids handling. AltaGas' Midstream segment also includes its natural gas and NGL (natural gas liquids, which includes primarily propane, butane, and condensate) marketing business, domestic logistics, trucking and rail terminals, and liquid storage capability.

AltaGas’ Corporate/Other segment consists of the company’s corporate activities and a small portfolio of gas-fired power generation and distribution assets capable of generating 508 MW of power primarily in the state of California.

Utilities Business

The Utilities segment owns utility assets that deliver natural gas to end-users in the United States and operates a retail energy marketing business. The Utilities business consists of Washington Gas (in the District of Columbia, Maryland, and Virginia); Hampshire Gas, a regulated natural gas storage utility in West Virginia; SEMCO Gas in Michigan; and WGL Energy Services, which sells natural gas and electricity to retail customers on an unregulated basis. Prior to the close of the Alaska Utilities Disposition, which closed on March 1, 2023, the Utilities segment also included ENSTAR in Alaska and a 65 percent interest in CINGSA, a regulated natural gas storage utility in Alaska.

Regulatory Process

The Utilities business predominantly operates in regulated marketplaces where, as franchise or certificate holders, regulated utilities are allowed by the regulator to charge regulated rates.

SEMCO Gas (the Michigan natural gas distribution business conducted by SEMCO Energy in Michigan under the name SEMCO Energy Gas Company) and Washington Gas (Washington Gas Light Company, a subsidiary of WGL that sells and delivers natural gas primarily to retail customers in the District of Columbia, Maryland and Virginia in accordance with tariffs approved by the PSC of DC, the PSC of MD and the SCC of VA) have accelerated pipe and infrastructure replacement programs in place in Michigan and in the District of Columbia, Maryland, and Virginia, respectively.

The Utilities business is subject to regulation over, among other things, rates, accounting procedures, and standards of service. The MPSC has jurisdiction over the regulatory matters related, directly or indirectly, to the services that SEMCO Gas provides to its Michigan customers. Washington Gas is regulated by the PSC of DC, the PSC of MD, and the SCC of VA, which approve its terms of service and the billing rates that it charges to its customers, regulate interactions with affiliates, and regulate retail competition for natural gas supply service. In all jurisdictions, the regulators approve distribution rates based on a cost-of-service regulatory model. In Alaska, the District of Columbia, and Maryland, rates are set using the results from a historical test year plus known and measurable changes.

Washington Gas

Washington Gas has been engaged in the natural gas distribution business since 1848 and provides regulated gas distribution services to end users in the District of Columbia, Maryland and Virginia. The utility has approximately 1.2 million customers across these three jurisdictions: District of Columbia, Maryland, and Virginia. Washington Gas operations are such that the loss of any one customer or group of customers would not have a significant adverse effect on its business.

Operations

Washington Gas obtains natural gas supplies that originate from multiple regions throughout the U.S. As of December 31, 2022, it had service agreements with four pipeline companies that provided firm transportation and storage services, with contract expiration dates ranging from 2023 to 2044. Washington Gas has also contracted with various interstate pipeline and storage companies to add to its storage and transportation capacity.

Hampshire Gas

Hampshire owns underground natural gas storage facilities, including pipeline delivery facilities located in and around Hampshire County, West Virginia, and operates these facilities to serve Washington Gas. Hampshire is regulated by the FERC.

SEMCO Energy

SEMCO Energy’s head office is located in Port Huron, Michigan. SEMCO Energy’s primary business is a gas utility business. It operates regulated natural gas transmission and distribution divisions in Michigan, doing business as SEMCO Gas. Prior to the close of the Alaska Utilities Disposition on March 1, 2023, SEMCO Energy also included ENSTAR in Alaska and a 65 percent ownership interest in CINGSA, a regulated natural gas storage utility in Alaska. The gas utility business accounts for approximately 99 percent of SEMCO Energy’s 2022 consolidated revenues. The gas utility business purchases, transports, distributes, stores and sells natural gas and related gas distribution services to residential and C&I customers and is SEMCO Energy's largest business segment.

SEMCO Gas

In Michigan, SEMCO Gas distributes natural gas to approximately 320,000 regulated customers located in both southern Michigan and Michigan’s Upper Peninsula, approximately 92 percent of which are residential. The remaining customers include power plants, food production facilities, furniture manufacturers, and other industrial customers.

Operations

The SEMCO Gas natural gas transmission and delivery system in Michigan includes approximately 197 miles of gas transmission pipelines and 6,551 miles of gas distribution mains. The pipelines and mains are located throughout the southern half of Michigan’s Lower Peninsula (including in and around the cities of Albion, Battle Creek, Holland, Niles, Port Huron, and Three Rivers) and also in the central, eastern, and western areas of Michigan’s Upper Peninsula.

SEMCO Gas has access to natural gas supplies throughout the U.S. and Canada via interstate and intrastate pipelines in and near Michigan. To provide gas to SEMCO Gas sales customers, SEMCO Gas has negotiated standard terms and conditions for the purchase of natural gas under the NAESB form of agreement with a variety of suppliers.

Retail Energy Marketing

AltaGas' retail energy marketing business consists of the operations of WGL Energy Services, which sells natural gas and electricity directly to residential, commercial, and industrial customers located in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia.

WGL Energy Services has a secured supply arrangement with Shell Energy North America (US), L.P (Shell Energy). Under this arrangement, WGL Energy Services has the ability to purchase the majority of its power, natural gas, and related products from Shell Energy in a structure that reduces WGL Energy Services’ cash flow risk from collateral posting requirements. While Shell Energy is intended to be the majority provider of natural gas and electricity, WGL Energy Services retains the right to purchase supply from other providers. The supply arrangement with Shell Energy expires in March 2024.

Natural Gas

As of December 31, 2022, WGL Energy Services served approximately 84,000 residential, commercial and industrial natural gas customers located in Maryland, Virginia, Delaware, Pennsylvania, and the District of Columbia. To supplement WGL Energy Services’ natural gas supplies during periods of high customer demand, WGL Energy Services maintains gas storage inventory in storage facilities that are assigned by natural gas utilities, such as Washington Gas.

Electricity

As of December 31, 2022, WGL Energy Services served approximately 84,000 residential, commercial, and industrial electricity customer accounts located in Maryland, Delaware, Pennsylvania, Ohio, and the District of Columbia.

Midstream Business

AltaGas’ Midstream segment is a leading North American platform that connects customers and markets. From wellhead to tidewater and beyond, the company focuses on providing its customers with safe and reliable service and connectivity that facilitates the best outcomes for their businesses. This includes global market access for North American LPGs, which provides North American producers and aggregators with attractive netbacks for propane and butane while delivering diversity of supply and supporting stronger energy security in Asia.

AltaGas’ Midstream platform is heavily focused on the Montney resource play in Northeastern B.C. and centers around global exports. AltaGas also operates a broader set of midstream infrastructure assets across the WCSB and select regions in the U.S., which are all focused on connecting customers and markets in the most efficient manner possible.

There are three core pillars to AltaGas’ Midstream platform that are integral to each other and facilitate the company’s wellhead to tidewater and beyond value chain. These include:

Global Exports, which includes AltaGas’ two LPG export terminals where the company has capacity to export up to 150,000 Bbl/d of propane and butane to key markets in Asia;

Natural Gas Gathering, Processing and Extraction, which includes 1.2 Bcf/d of extraction processing capacity and approximately 1.1 Bcf/d of raw field gas processing capacity, which is heavily focused on the Montney; and

Fractionation and Liquids Handling platform, which includes 65 MBbl/d of fractionation capacity and a sizable liquids handling footprint.

The Midstream segment also consists of natural gas, crude oil, and NGL marketing business, domestic logistics, trucking and rail terminals, and approximately 3.2 million barrels of liquid storage capability though a network of underground salt caverns through the company’s Strathcona Storage Joint Venture with ATCO Energy Solutions Ltd, as well as AltaGas’ 10 percent interest in the MVP.

Global Exports

AltaGas' global export assets are focused on providing North American producers global market access and incremental value for NGLs. Global export assets extend AltaGas' integrated value chain and attract additional volumes to the AltaGas system, supporting future growth of the overall Midstream infrastructure platform with export capacity of up to 150,000 Bbls/d to Asian markets.

On June 23, 2022, the Canada Energy Regulator approved AltaGas' application for a 25-year export license for an additional 46,000 (40,000 Bbls/d plus 15 percent tolerance) Bbls/d of butane. The license will allow AltaGas to export additional Canadian butane volumes through non-seaborne exports into the U.S. via rail, including deliveries to the company's Ferndale export terminal in Washington State, and potentially the seaborne exports from Ridley Island in British Columbia over the long-term.

RIPET

On October 16, 2015, AltaGas entered into a project agreement with Trigon Pacific Terminals Ltd. for RIPET, with construction commencing in April 2017. In May 2017, AltaGas entered into a joint venture agreement with Vopak pursuant to which Vopak acquired a 30 percent interest in RIPET. The commercial operations of RIPET commenced in May 2019, with the first propane shipment departing from the terminal to Asia.

Based on production at AltaGas' Midstream facilities and commercial contracts executed or under negotiation, RIPET ended the year with physical throughput of approximately 63,765 Bbls/d in December of 2022, with the ability to increase throughput to upwards of 80,000 Bbls/d.

The terminal leverages CN’s existing railway network and the deepest harbor in North America to offer Canada’s natural gas producers direct access to international markets and a 15-day shipping advantage versus the U.S. Gulf Coast. With RIPET being the closest North American LPG terminal to Asia, it allows Canadian natural gas and propane producers and aggregators to diversify their market access to Asia, a premium market for propane. RIPET is capable of storing 600,000 Bbls of propane.

Ferndale LPG Export Facility

Located approximately 100 miles north of Seattle, the Ferndale terminal represents a strategic outlet point for North American LPG volumes. The terminal is capable of handling upwards of 75,000 Bbls/d of throughput capacity, with 800,000 Bbls of on-site storage capacity and rail siding capacity for up to 40 railcars.

Natural Gas Gathering, Processing and Extraction

Midstream processing activities are consists of gathering systems that move natural gas on behalf of producers from the wellhead to AltaGas plants where impurities and certain hydrocarbon components are removed, and the gas is compressed to meet the operating specifications of downstream pipeline systems. AltaGas’ Midstream processing facilities serve customers primarily in the WCSB that deliver natural gas into downstream pipeline systems and can connect producers to the global export markets for LPG. AltaGas has a total net licensed processing capacity of approximately 2.3 Bcf/d, of which approximately 15 percent is capable of processing sour gas. All of AltaGas' processing facilities are capable of extracting NGLs. The main drivers of AltaGas' processing activities are throughput, inlet composition, gathering and processing fees, frac spreads, and operating costs, with several facilities having the benefit of take-or-pay contracts. Throughput is impacted by new well tie-ins, re-activations, re-completions, well optimizations performed by producers, natural production declines in areas served by AltaGas’ processing facilities, and gas available on the main lines.

On April 12, 2022, AltaGas closed the sale of its interest in the Aitken Creek processing facilities. The disposition was triggered as a result of the operator of the facilities exercising a purchase option.

Townsend Complex

The Townsend complex, which is wholly owned by AltaGas, is a 550 Mmcf/d gas processing facility located approximately 100 km north of Fort St. John and 20 km southeast of AltaGas’ Blair Creek facility. The majority of the processing capacity is contracted with Montney producers in the area under long-term take-or-pay agreements. In addition, the Townsend complex is able to provide NGL handling, treatment, and storage services to producers.

A 25 km gas gathering line connects the Blair Creek field gathering area to the Townsend complex.

Gordondale

AltaGas owns 100 percent of the Gordondale facility which has licensed capacity of 150 Mmcf/d for processing sour natural gas. AltaGas operates the facility which is located in the Gordondale area of the Montney reserve area approximately 100 km northwest of Grande Prairie, Alberta. The Gordondale facility processes gas gathered from Birchcliff's Gordondale Montney development under a long-term take-or-pay contract.

Blair Creek

AltaGas owns 100 percent of the Blair Creek facility which has licensed capacity of 120 Mmcf/d of natural gas. AltaGas operates the facility which is located approximately 140 km northwest of Fort St. John, British Columbia. The facility processes gas gathered from Montney producers in the area. The plant is equipped with liquids extraction facilities to capture the NGL value for the producer.

JEEP

AltaGas owns 100 percent of JEEP which has processing capacity of 250 Mmcf/d of natural gas and is capable of producing up to 10,400 Bbls/d of ethane and other NGLs.

EEEP

AltaGas owns 100 percent of EEEP. EEEP is directly connected to the Alberta Ethane Gathering System and to Plains Midstream Canada’s Co-Ed NGL pipeline. The plant has a licensed gross inlet capacity of 390 Mmcf/d of natural gas and gross production capacity of 30,500 Bbls/d of ethane and other NGLs.

The processed gas from the facility supplies end-use markets in the city of Edmonton, Alberta. Almost all of EEEP ethane production capacity is sold to ethane buyers under long-term fee-for-service contracts. The NGL production is delivered to a Fort Saskatchewan fractionator for further processing. AltaGas takes the resulting spec products in-kind and sells to North American and global markets, through RIPET, to maximize plant gate netbacks.

Gas is supplied to EEEP under a gas supply agreement with NGTL which includes the right for AltaGas to extract liquids from all gas processed at EEEP.

Harmattan

AltaGas owns a 100 percent interest in Harmattan located 100 km north of Calgary, Alberta. Harmattan has natural gas processing capacity of 490 Mmcf/d consisting of sour gas treating, co-stream processing, and NGL extraction. In addition, Harmattan has fractionation and terminalling facilities.

AltaGas entered into a 250 Mmcf/d cost-of-service co-stream processing agreement with Nova Chemicals related to ethane and other NGL extraction at Harmattan in 2012 for an initial term of 20 years. AltaGas will deliver all NGLs or co-stream gas products on a full cost-of-service basis to Nova Chemicals.

AltaGas has 45 MW of co-generation capacity in Alberta through three co-generation facilities, each of which can generate 15 MW of power. The co-generation facilities are located at AltaGas' Harmattan facility and have a heat recovery steam generator that is capable of producing all of the steam required to process gas at Harmattan from the waste heat in the exhaust gases from the turbine. Excess electricity from the co-generation units is delivered to the Alberta power market.

AltaGas is advancing an opportunity to capture up to 60,000 tonnes/year of carbon emissions at Harmattan.

Younger

AltaGas owns a 28.33 percent interest in Younger processing and extraction assets and a 50 percent interest in Younger's fractionation and terminalling assets. Younger has licensed capacity to process up to 750 Mmcf/d of natural gas and AltaGas’ share of such capacity is 213 Mmcf/d. The remaining interest is held by Pembina, which has assumed plant operatorship. Younger processes natural gas transported on the West Coast transmission system and other regional transmission systems to recover NGLs. Natural gas supply to Younger is dependent on the amount of raw gas processed at the McMahon gas plant, which is based on the robust natural gas producing region of northeastern British Columbia.

Fractionation and Liquids Handling

AltaGas' liquids handling infrastructure consists of NGL pipelines, treating, storage, and truck and rail terminal infrastructure centered around AltaGas’ key Midstream operating assets at RIPET, the Ferndale terminal, Harmattan, and in NEBC, the Townsend complex and the North Pine facility. In the NEBC area, a network of NGL pipelines connects upstream gas plant producers to the AltaGas North Pine facility. The NEBC NGL pipelines consist of three liquids egress lines, with the third line commissioned in the third quarter of 2020, connecting the Townsend complex to the truck terminal on the Alaska Highway (30 km) and AltaGas' North Pine facility (70 km). In addition, NGL and spec propane lines that connect the Townsend complex in the North to the Aitken Creek facilities through the 60 km Aitken Connector NGL pipeline, Canadian Natural Resources Limited's Nig plant through a lateral, and the Tourmaline Gundy facility in the West through a 15 km spec propane line were all commissioned in the first half of 2020. AltaGas' liquids handling infrastructure also consists of a 15,000 Bbls/d NGL treatment facility at the Townsend complex designed to process mercaptan rich NGL volumes delivered from the Townsend complex deep-cut plant and Aitken Connector pipeline.

Harmattan

Harmattan has NGL fractionation capacity of 35,000 Bbls/d, a 450 Bbls/d capacity frac oil processing facility, and a 200 tonnes/d capacity industrial grade CO2 facility. Harmattan is the only deep-cut and full fractionation plant in its operating area. Fractionation services at Harmattan are provided under contracts with a variety of commercial arrangements and terms, typically fee-for-service revenues. Harmattan fractionation services include a truck terminal for NGL mix delivered from adjacent plants in the area, as well as a rail terminal at Didsbury with a loading capacity of approximately 10,000 Bbls/d.

Younger

AltaGas owns a 50 percent interest in Younger's fractionation, storage, loading, treating and terminalling of NGL facility, with the remaining interest held by Pembina, which operates the plant. While Younger is the only straddle plant in its operating area, the Alliance pipeline competes for local natural gas supply. Pembina is responsible for sourcing AltaGas’ gas supply and AltaGas markets its share of NGLs produced.

North Pine Facility

The North Pine facility is the only custom fractionation plant in B.C., providing area producers with a lower cost, higher netback alternative for their NGLs than transporting and fractionating in Edmonton. The first train of the North Pine facility is capable of processing up to 10,000 Bbls/d of NGL mix. The second train, commissioned in the first quarter of 2020, provides an additional 10,000 Bbls/d of NGL mix.

The North Pine facility is connected via the North Pine pipelines to the Townsend truck terminal which has a capacity of 10,000 Bbls/d and is contracted through long-term supply agreements with the producers at the Townsend complex. The North Pine facility is also connected to the Tourmaline Gundy facility, and has access to the CN rail network, allowing for the transportation of propane, butane, and condensate to North American markets and propane to global markets via RIPET.

Terminals and Storage Business

AltaGas' Midstream segment also includes a terminals business, which supports its marketing and distribution business by providing the ability to source, transport, process, store, and deliver products through strategically located fixed assets throughout North America. In addition, the terminals business provides various terminalling services to third party customers through take-or-pay or fee-for-service agreements which provide earnings stability through volatile commodity price environments.

The terminals business consists of strategically located crude oil and NGL assets, which provide storage, blending, rail and truck logistical support and waterborne LPG export capabilities.

AltaGas' significant terminals are as follows:

Griffith LPG Terminal

Owned and operated by AltaGas, the Griffith LPG terminal directly supports domestic propane and butane marketing efforts. Equipped with inbound and outbound truck and rail infrastructure, the terminal is capable of handling approximately 12,000 Bbls/d, and can be easily expandable to 30,000 Bbls/d. Underground caverns provide 700,000 barrels of storage and rail siding capacity exists for up to 220 railcars. Storage services are provided on a fee for service basis including to pipeline connected refiners.

Fort Saskatchewan NGL Terminal

Owned and operated by AltaGas, this facility was built by Petrogas and provides multiproduct storage and handling support to the marketing business while also generating fee-for-service revenues through third party agreements.

Connected to a regional fractionation facility and to the Strathcona Storage Caverns through a 10 km AltaGas constructed and owned pipeline, the Fort Saskatchewan facility is equipped with truck and rail loading and offloading infrastructure, providing 25,000 Bbls/d of throughput capacity. The terminal has rail siding capacity for up to 265 railcars and on-site tank storage for 180,000 Bbls. The terminal is an important staging area for RIPET and Ferndale terminal destined product, providing key export exposure optionality to regional producers.

Sarnia Storage and Crude Oil Terminal JV Agreement

The Sarnia storage and crude oil terminal is a joint venture agreement with Nova Chemicals, providing AltaGas with crude oil storage and crude-to-rail infrastructure accessibility. Situated in southern Ontario, this terminal provides the ability to service crude oil demand needs to eastern refiners and end users through regional rail networks and Enbridge pipeline infrastructure. The joint venture partner supplies and manages the terminal assets, while AltaGas manages the marketing and commercial agreements for the terminal. The right to access the terminal assets under the joint venture arrangement have been recorded as a lease by AltaGas. This terminal provides up to 2.1 million Bbls of crude oil and refined product storage capacity with outbound throughput supported by 10,000 Bbls/d of rail loading capacity. The terminal generates revenue through storage contracts and storage tank leases, rail loading, and term commitments for crude oil supply. The joint venture agreement expires in 2028 and can be renewed at the discretion of the parties.

Strathcona Storage JV

The Strathcona Storage Joint Venture facility is a joint venture with ATCO Energy Solutions Ltd. which is located near Fort Saskatchewan, Alberta. AltaGas holds a 40 percent ownership interest in the facility. The facility is strategically positioned to help satisfy storage needs from increased liquids rich production from the Duvernay and Montney shale basins, while also supporting petrochemical requirements in the Edmonton area. The facility consists of five underground storage salt caverns in service, which have a combined storage capacity of 3,215,500 Bbls. Construction of the fifth cavern was completed in the third quarter of 2022 and is storing customer product.

Crude Blending Terminals

Owned and operated by AltaGas, the crude blending terminals consist of five blending terminals located throughout Alberta and Southern Saskatchewan. These terminals blend heavier grade crude oil to meet pipeline specification requirements and are designed to operate at an average capacity of 25,700 Bbls/d. Feedstock is sourced through trucking infrastructure and pipeline connected batteries, with offloading capability through connections to regional pipelines.

Other

AltaGas maintains an assortment of ancillary owned and leased storage assets across North America to support marketing and distribution and terminal efforts. Locations include the Yahk B.C. propane truck terminal, Scranton propane terminal, Guernsey and Edmonton leased crude tanks and various other strategic leased NGL storage at key hubs.

In addition, AltaGas' natural gas storage assets include a 50 percent ownership of the 6.4 GJ Sarnia natural gas storage facility connected to the Dawn Hub in Eastern Canada.

Trucking and Wellsite Fluids

Trucking Business

AltaGas' Midstream business includes three primary trucking entities, which provide transportation related services within the WCSB and the United States Pacific Northwest by hauling frac fluid, produced water, crude oil and NGLs between producers, terminals, customers and end users. Trucking operations are instrumental in connecting suppliers and customers to either the AltaGas infrastructure assets, third party terminals, or long-haul transportation to domestic wholesale markets.

In addition to first party volumes, the trucking business maintains various agreements with regional oil and gas production companies for hauling services from remote drilling locations.

Wellsite Fluids and Fuels

Enerchem International Inc. is a Canadian corporation which focuses on the production of drilling and wellsite fluids, and consumer fuels. Through the fractionation of crude oil feedstock, Enerchem produces and distributes proprietary hydrocarbon fluids for drilling oil and gas wells to improve productivity and to resolve oilfield production challenges for downstream producers.

Enerchem operates two primary facilities located in Sundre and Slave Lake, Alberta, which are capable of processing over 1.5 million Bbls of finished products per year. These plants are supported by various ancillary storage and distribution facilities located across the WCSB providing over 150,000 Bbls of storage capacity, strategically placed within the vicinity of active drilling regions.

Other Liquids Handling Services

To support LPG and NGL handling, AltaGas manages a rail logistics network consisting of approximately 4,600 rail cars. AltaGas is active in identifying opportunities to buy and resell NGLs for producers and exchange, reallocate, or resell pipeline capacity and storage to earn a profit. Net revenues from these activities are derived from low risk opportunities based on transportation cost differentials between pipeline systems and differences in commodity prices from one period to another. AltaGas also provides energy procurement services for utility gas users and manages the third-party pipeline transportation requirements for many of its gas marketing customers.

AltaGas' marketing business is focused on the purchase, sale, exchange, and distribution of NGLs and crude oil, primarily in proximity to its strategically owned and leased asset base. By leveraging AltaGas' fully integrated infrastructure base and extensive logistical capabilities, the marketing team is able to source competitively priced supply at the key hubs and across various hydrocarbon basins in order to capture arbitrage opportunities derived through regional pricing differentials. Marketing efforts are driven by two primary focuses: domestic NGL and crude oil wholesale, and LPG waterborne exports. AltaGas supports its distribution efforts by maintaining an extensive leased rail fleet. Leases are on a full-service basis and are established on a staggered maturity schedule with multiple lessors to ensure railcar integrity and up-to-date DOT classification.

Mountain Valley

AltaGas owns a 10 percent equity interest in Mountain Valley. The proposed FERC regulated interstate natural gas pipeline, which is being developed, constructed, and owned by Mountain Valley (a venture of EQT and other entities), is planned to transport approximately 2.0 Bcf/d of natural gas and to extend 300 miles from Equitrans LP’s system in Wetzel County, West Virginia to Transco’s Station 165 in Pittsylvania County, Virginia.

In the first quarter of 2022, the U.S. Fourth Circuit Court of Appeals (Fourth Circuit Court) issued separate decisions vacating and remanding, on specific issues, the U.S. Forest Service and Bureau of Land Management permits that allow the pipeline to pass through the Jefferson National Forest and the U.S. Fish and Wildlife Service Endangered Species Act Biological Opinion (Biological Opinion). Until the pipeline has a valid Biological Opinion, the Army Corps has stated they will not approve the necessary permits. On February 28, 2023, the U.S. Fish and Wildlife Service issued a revised Biological Opinion. Mountain Valley remains engaged in the permitting process with the relevant federal agencies to obtain the permits necessary to complete the project.

Midstream Utilization

AltaGas strives for continued improvement, operational excellence, and maximum utilization of all facilities over which it has operational control and to consistently exceed WCSB average utilization rates. Volume additions at plants, which come from new well tie-ins and from re-activations, re-completions, and well optimizations performed by producers, are offset by natural production declines. Global export volumes are driven by production at AltaGas' Midstream facilities, LPG supply from the WCSB, and various long-term purchase agreements with Canadian and American suppliers.

Global Exports

Average global exports utilization increased to 85 percent in 2022 and throughput volumes increased to 101,654 Bbls/d during the year ended December 31, 2022. There were 68 shipments to Asia during the year ended December 31, 2022.

Gas Processing

Average processing facility utilization of core assets decreased to 61 percent in 2022 from 62 percent in 2021 primarily due to the sale of AltaGas' interest in the Aitken Creek processing facilities.

Fractionation

Average fractionation utilization of 65 percent in 2022 is higher than 47 percent utilization in 2021 due to the additional liquids volumes from the NEBC facilities, higher volumes at Younger, and higher trucked-in volumes at Harmattan.

Significant Operating Areas and Customers

Global Exports

As two of the only three LPG terminals operating on the west coast of North America and the only two able to ship with VLGCs and Large Gas Carriers, RIPET and the Ferndale terminal offer significantly reduced shipping times to the Asian LPG markets compared to the other North American LPG terminals that are not located on the west coast. Both terminals are connected to the key North American hubs with rail networks.

Processing and Fractionation

Approximately 48 percent of AltaGas’ processing volumes are processed through the Townsend complex, Blair Creek facility, Gordondale facility, and the Younger facility located in the liquids-rich Montney resource play in NEBC.

AltaGas has also fractionation capacity in NEBC through the North Pine facility and Younger facility. The North Pine facility is interconnected to the Townsend complex and is the only custom fractionation plant in British Columbia, providing area producers with a lower cost, higher netback alternative for their NGLs than fractionating in Edmonton.

The JEEP and EEEP facilities are strategically located and take advantage of the gas consumption by the petrochemical industry and the City of Edmonton. Harmattan is a significant service provider with a large capture area in west central Alberta. Many other facilities in the Harmattan area are underutilized, providing AltaGas with opportunities to consolidate and increase asset utilization and profitability.

Terminals and Storage

The Fort Saskatchewan NGL terminal is strategically located in the Fort Saskatchewan petrochemical hub, near Edmonton. It is pipeline connected to a regional fractionator with long-term agreements to ship LPGs. The terminal is also pipeline connected to the Strathcona Storage Joint Venture which is located in the same area. The LPG caverns are supporting the supply and logistics capabilities required for the global export business.

Midstream Contractual Arrangements

Global Exports

RIPET and Ferndale terminal annual capacity is managed through a combination of merchant supply agreements and tolling arrangements for both propane and butane. AltaGas' plans are to have an increasing amount of RIPET and Ferndale terminal's capacity underpinned by tolling arrangements with focus on creating an integrated value chain for AltaGas' customers and suppliers in the WCSB from the wellhead to the global export markets.

In 2023, AltaGas has in place agreements for the purchase of approximately 60 percent of the propane expected to be shipped from RIPET. Approximately 60 percent of RIPET propane volumes are exported under term and semi-term contracts, while 40 percent are under current year strip or spot contracts.

In 2023, AltaGas also has in place agreements for propane and butane offtake volumes for the purchase of approximately 60 percent of the product expected to be shipped from the Ferndale terminal. Approximately 58 percent of Ferndale terminal propane and butane volumes are exported under term and semi-term contracts, while 42 percent are under current year strip or spot contracts.

Processing and Fractionation

AltaGas gathers, processes, and fractionates natural gas and NGL under contracts with natural gas producers. There are approximately 190 active processing contracts with approximately 103 counterparties.

Terminals and Storage

The Fort Saskatchewan terminal offloads NGLs from the nearby fractionator and loads propane and butane onto tank trucks and railcars. A portion of the terminal's capacity is dedicated under a long-term agreement to the fractionation facility and provides egress capability for its customers. AltaGas enters into annual and long-term loading agreements with customers in the Fort Saskatchewan hub at the competitive market based rates.

The Strathcona Storage Joint Venture handles propane, butane, and ethylene for customers/owners of the Fort Saskatchewan petrochemical hub. The two ethylene caverns store products under long-term lease agreements underpinned by cost of service models with creditworthy counterparties. The NGL caverns are leased under long-term agreements at market rate storage fees plus reimbursement of operating and maintenance costs.

Corporate/Other segment

Power Assets

AltaGas' power assets are engaged in the generation and sale of capacity, electricity, ancillary services, and related products, primarily in California. After the sale of Brush II in the second quarter of 2022, AltaGas has 508 MW of installed power capacity from a combination of gas-fired.

Gas-Fired Generation

In southern California, the Blythe Energy Center utilizes gas-fired generation to produce power and serves the transmission grid operated by the CAISO to cover periods of high demand primarily driven by the Los Angeles area. The facility is directly connected to an El Paso Gas Company natural gas pipeline for its primary supply and a Southern California Gas Company pipeline as a secondary supply source, and interconnects to SCE and CAISO via a 67-mile transmission line also owned by Blythe and part of the Blythe Energy Center. In 2019, AltaGas announced the successful recontracting of the Blythe Energy Center to SCE. Under the tolling agreement, SCE has exclusive rights to all capacity, energy, ancillary services, and resource adequacy benefits. The agreement became effective on August 1, 2020 and runs through December 31, 2023. In February 2023, AltaGas reached an agreement with SCE for the purchase of resource adequacy attributes from the Blythe facility for the period from January 1, 2024 through December 31, 2027.

History

AltaGas Ltd. was founded in 1994.