Two Alberta petrochemical plants to get up to $500M in royalty credits under diversification program
CBC News | Posted: December 5, 2016 7:19 PM | Last Updated: December 5, 2016
Province 'blown away' by interest shown by potential investors, Bilous says
Two new petrochemical projects for the Industrial Heartland region will qualify for up to $500 million in royalty credits under Alberta's petrochemicals diversification program announced early in 2016.
Both projects will convert propane extracted from natural gas into value-added plastic products.
Energy Minister Marg McCuaig-Boyd and Economic Development Minister Deron Bilous announced Monday the two projects have been approved to receive royalty credits under the program.
Bilous told a news conference there was more interest in the program than had been anticipated.
"Minister McCuaig-Boyd and I, and all our colleagues in government, were blown away by the amount of interest this program received from potential investors," Bilous said. "It is our hope we can build on the hope the program has generated."
"These investments will help create world-class petrochemical facilities, diversify our energy economy and create thousands of high-paying, skilled jobs in Alberta," McCuaig-Boyd said in a news release.
Together, the two facilities will provide 1,400 direct and indirect full-time jobs when they are up and running, said Jean-Marc Prevost, press secretary to Bilous.
Propylene and polypropylene
The first project is a joint venture between Calgary-based Pembina Pipeline Corporation and Petrochemical Industries Company, based in Kuwait, to build a new facility in Sturgeon County.
With construction costs estimated at between $3.8 billion to $4.2 billion, the facility will process 22,000 barrels per day of propane into polypropylene, the plastic material used in manufacturing a wide variety of everyday products, from automobile parts to Canadian bank notes.
Construction is expected to start in 2019, with the facility operating by 2021.
Construction would involve a workforce of between 2,000 and 2,500 workers. When the facility is operating, it will employ more than 150 full-time operations and head office staff.
It has been approved to receive up to $300 million in royalty credits under the diversification program.
The second project, by Calgary-based Inter Pipeline, has been approved for up to $200 million in royalty credits.
Inter Pipeline plans to build a $1.85-billion facility in Strathcona County to process 22,000 barrels per day of propane into propylene, a feedstock for the production of polypropylene and other derivatives.
Construction is expected to start in 2017, with the facility in production by 2021.
At the peak of the three-year construction phase, 2,000 full-time equivalent jobs would be created — 1,600 on site and the rest in fabrication and module shops and at engineering firms. When it is up and running the facility will employ about 95 full-time operations positions.
Good news for Industrial Heartland
Ed Gibbons, the Edmonton city councillor who serves as chair of Alberta's Industrial Heartland Association, said the announcement is great news for the Industrial Heartland and for the province.
"These new petrochemical facilities will create stable jobs and new value chains that will benefit Albertans for decades to come," Gibbons said. "We commend the province on moving forward with this program and thank the companies involved for making Alberta's Industrial Heartland their location of choice."
The petrochemicals diversification program was created to encourage companies to invest in the development of new Alberta petrochemical facilities by providing royalty credits up to $500 million.
Under the program, royalty credits are only provided after construction is completed and a facility is operating.