Propane processing facilities result of successful bids under the Petrochemical Diversification Program
Alberta’s Industrial Heartland (December 5, 2016) – Two new propane processing facilities are one step closer to reality thanks to today’s announcement by the Government of Alberta. Major investments proposed by Inter Pipeline Ltd and Pembina Pipeline Corporation have been approved to receive royalty credits as part of the Alberta Government’s Petrochemicals Diversification Program. These proposed facilities will add value to Alberta’s propane resources, creating growth and diversity in Alberta’s Industrial Heartland and Alberta’s energy sector.
“Petrochemical companies operate in an increasingly competitive, global market. Programs like the Petrochemical Diversification Program help position Alberta and our region as a competitive location for investment,” explains Ed Gibbons, Chair of Alberta’s Industrial Heartland Association (AIHA). “We commend the Government of Alberta for their support of value added processing and we congratulate Inter Pipeline and the joint venture of Pembina and Petrochemical Industries Company on their successful bids to the program. We welcome these innovative facilities to our region and Alberta.”
The proposed propane dehydrogenation (PDH) projects are the first of their kind in Canada, and take advantage of the Heartland’s ample supply of cost advantaged propane feedstock. Traditionally propane is used as a fuel product or shipped out of Alberta for processing elsewhere. The new facilities will convert propane into a higher value energy product. It is then used as the building block for numerous consumer products that include plastics, acrylic fibers, paints and resins which are steadily increasing in global demand. Projects of this magnitude help build sustainability in our workforce and communities, which strengthens Alberta’s economy.
Alberta’s Industrial Heartland will see direct positive impacts from these new facilities, which are expected to reach a combined capital cost of approximately $6 billion. This will generate a total of 4000+ construction jobs, nearly 250 operational jobs, increases to local spending, and the generation of tax revenues for local municipalities.
On a provincial scale, these projects will contribute to growth in Alberta’s Gross Domestic Product. Alberta communities will benefit from increased provincial tax revenue and a growing demand for engineering, fabrication, trades, and other professional jobs.
“Alberta is a particularly attractive location for a world-scale PDH facility given the ample supply of low-cost propane feedstock,” says Inter Pipeline’s President and CEO Christian Bayle. “A PDH facility and associated derivative facilities are an innovative way to provide new markets for Alberta propane, create jobs and help diversify our energy based economy.”
“Alberta’s Industrial Heartland has a number of significant advantages for our proposed facility, including the ability to utilize existing infrastructure such as rail, close proximity to inlet pipeline connections, high-load corridor road access, favourable site access and location adjacent to our existing Redwater facility, as well as a local skilled workforce,” says Mick Dilger, President & CEO, Pembina Pipeline Corporation. “The expansion work at our Redwater facility and our ongoing operations in the area have demonstrated the opportunities in the Heartland and the ability to take a coordinated approach to development.”
AIHA is eager to see both projects move forward into the construction phase. These projects will capitalize on market conditions, feedstock supplies, access to skilled labour, and government support for value added processing here at home. The Association looks forward to working cooperatively with the Government of Alberta’s Energy Diversification Advisory Committee to evaluate future program opportunities that will continue to promote value added investment and growth in the province’s energy sector.
For more information on the Petrochemicals Diversification Program, visit www.energy.alberta.ca. For more information and regular updates on Alberta’s Industrial Heartland Association, visit www.industrialheartland.com or follow @ABHeartland on Twitter.
Alberta’s Industrial Heartland is Canada’s largest hydrocarbon processing region. Alberta’s Industrial Heartland Association is dedicated to coordinating, advocating, and promoting long-term sustainable development of the region. The municipal partnership includes Lamont County, Strathcona County, Sturgeon County, and the Cities of Edmonton and Fort Saskatchewan.
Director of Communications
Alberta’s Industrial Heartland Association
Alberta’s Industrial Heartland
Alberta’s Industrial Heartland is Canada’s largest hydrocarbon processing region. It is also one of the world’s most attractive locations for petrochemical, chemical, oil, and gas investment.
The region is home to 40+ companies in a variety of sectors including producing and processing oil, gas, and petrochemicals, as well as advanced manufacturing. Since 1958, world renowned companies have chosen to locate in Alberta’s Industrial Heartland due to the natural advantages it offers.
Located directly northeast of Alberta’s capital city, Edmonton, the 582 square kilometer region has over $32 billion invested to date, and $15+ billion in projects announced or under construction. Companies in Alberta’s Industrial Heartland create jobs for more than 25,000 people and spend approximately $1.5 billion annually on locally sourced goods and services.
Diversification Through Value Added Processing
Alberta has a competitive advantage with an abundant source of cost advantaged propane feedstock. As the owners of our natural resources, it’s in the best interest of the government, on behalf of Albertans, to maximize the value of those resources.
Government programs like the Petrochemicals Diversification Program helps diversify Alberta’s energy sector. It acts as an incentive for companies to build upon the strength of our energy industry in the province. Value added processing of our ample feedstock (propane) contributes significantly to increased employment, economic activity, and taxation over and above the selling of the feedstock itself. Polypropylene, for instance, is worth six to eight times the value of propane.
Diversifying our energy sector to include more downstream petrochemical processing helps dampen the effects of price swings in oil and gas. It also provides stable, long term, high paying jobs that are much less impacted by boom and bust cycles.
Overview of Program and Projects
The Petrochemicals Diversification Program granted $500 million in royalty credits to spur new investment in the province’s petrochemical sector. It builds on the existing strength in Alberta’s energy industry while helping the sector grow and diversify. Both Inter Pipeline Ltd and Pembina Pipeline Corporation, who is working jointly with Petrochemical Industries Company, each have plans for a propane dehydrogenation (PDH) facility to create propylene, which will be further processed into higher value polypropylene. Awarded credits become available only once the facilities are constructed and operational.
Proposed Project by Inter Pipeline Ltd
The project would be located on land currently owned by Inter Pipeline in Strathcona County. The facility would use propane as its feedstock and convert it to propylene.
The facility would be integrated with their fractionator near Redwater. Once operational, the facility is designed to consume 22,000 barrels per day of propane and produce 525,000 tonnes per year of polymer grade propylene.
Project Status: Inter Pipeline expects to make a final investment decision on this project by mid 2017. Subject to full sanctioning, the project is expected to be operational in 2021.
Proposed Project by Pembina Pipeline Corporation and Petrochemical Industries Company K.S.C. (PIC)
The project would be located on land recently acquired by Pembina in Sturgeon County. The facility would use propane as its feedstock, converting it to propylene, and then further processing it into polypropylene.
Once operational, the facility could consume approximately 22,000 barrels per day of propane and produce up to 550,000 tonnes per year of polypropylene. The polypropylene could then be transported anywhere in the world in the form of pellets.
Project Status: Pembina is in the project development process, having recently completed the project’s feasibility study, which is currently under review. A decision on advancing the project to the next phase will be made in the coming weeks. A final investment decision will be made in 2018.