Province gives $1-billion boost to petrochemicals industry

EDMONTON The provincial government will spend $1 billion over the next four years on the petrochemical industry to try to diversify Alberta’s energy sector.

The cash will come from two streams: the second round of the petrochemicals diversification program, for which 16 companies applied last time, and a new feedstock infrastructure program.

Each will see around $500 million in funding. The diversification program will come in the form of royalty credits spread over four years starting in 2020-21. The feedstock infrastructure plan will see three years of loan guarantees and grants beginning in 2020-21.

Energy Minister Margaret McCuaig-Boyd announced the bump in cash Monday in Edmonton.

It comes hot on the heels of a new $1-billion program to encourage the construction of up to five new partial upgrading facilities in the province. That cash, spread out over the next eight years, will also come in the form of loan guarantees and grants.

Much like the partial upgrading program, this new petrochemical focus comes via the recommendations of Alberta’s energy diversification advisory committee.

The committee was formed after a royalty review in 2016. Its mandate was to figure out how to increase the value of Alberta’s resources and create more jobs.

It found that Alberta must be prepared for an increasingly volatile energy market as the world transitions away from fossil fuels.

The new feedstock program is intended to encourage natural gas midstream projects to support liquids extraction, focusing on ethane recovery, such as a company building a straddle plant alongside a pipeline, for instance.

It will run hand in hand with the diversification program to increase the availability of raw materials for petrochemical producers.

“What we’re doing is incentivizing industry to look for those opportunities, extract ethane and keep it here in the province rather than shipping it out,” McCuaigBoyd said.

Calgary-based Inter Pipeline was one of the recipients of the first round of the petrochemicals program funding.

It received credits for part of a $3.5-billion project near Fort Saskatchewan that converts propane to polypropylene — small plastic pellets that can be easily transported within Canada and overseas.

Senior vice-president David Chappell, who was at Monday’s announcement, said his firm sees more opportunities in the sector.

“Alberta does a good job of extracting oil and gas … but we don’t do a great job of finding markets, getting to markets,” he said.

“Adding value to our resources can do that.”