Petrochemical hub in the Hat?
Medicine Hat named as possible focal point as province discusses plans to diversify and innovate energy production
A report stating the Alberta government should back more bitumen upgrading in the province says work should also be done to boost Medicine Hat’s potential as a petrochemical refining hub.
Premier Rachel Notley told a mid-morning press conference in Edmonton that government needs to align with industry to counteract subsidies elsewhere and draw investment to the province.
“Make no mistake, there is a role for us to incent and foster energy innovation and diversification,” Notley said.
“We don’t need to sit on the sidelines and watch places like Louisiana eat our lunch.”
The main plank of the program is a potential $1-billion program for loan guarantees and grants to bolster partial upgrading of bitumen in the province. Removing the need to dilute oilsands crude would increase the amount that can be shipped via existing pipelines by 30 per cent.
Also outlined is plans to consider Medicine Hat, along with Grande Prairie and Joffre (near Red Deer), as petrochemical hubs or clusters. They would see greater emphasis on bringing pipeline and power supplies to the plant sites to attract new plants and expansions.
Invest Medicine Hat, the city’s contracted economic development provider, was one of a number of industry groups that provided information to committee while policy was being developed.
“It’s great news for Medicine Hat that the province is recognizing the petrochemical cluster that’s here is one of the most significant in the province and the country,” said Invest director of business development Jon Sookecheff on Monday.
“The city is a very willing partner and it bodes well for the future pertaining to purposed expansion projects.”
That work builds on last year’s petrochemical diversification program, which saw local plant operator Methanex register as one of 16 applicants for $500 million in royalty credits. Two plants proposing polyethylene production won the awards in late 2016, leading to $5 billion in planned plant construction in central Alberta.
Methanex itself is currently deciding on potential expansion projects here and in Louisiana. Tax breaks and subsidies there have often been the target of complaint from local business and elected officials hoping for local plant expansion, valued at up to US$1.3 billion.
Notley said specific plans announced later this spring will “build on the early successes” of the Alberta petrochemical program to “attract private investment to natural gas processing by providing companies with the feedstock certainty that they need to grow.”
Mark Plamondon, the executive director of the Industrial Heartland complex, said his group of large companies operating near Edmonton represents $40 billion in investment that has created 25,000 permanent jobs.
“The potential for the rest of Alberta is event greater,” he said, adding that “government support and alignment” are key components to compete against “aggressive incentive programs” in the southern United States.
“We know that other (jurisdictions) are aggressively pursuing these opportunities,” said Jeanette Pateil, co-chair of the Alberta Energy Diversification Advisory Committee, which authored the 167-page report.
Titled “Diversity, not Decline,” it suggests setting aside 30 per cent of all petroleum royalties to spur diversification projects.
Firms in Medicine Hat already produce major supplies of fertilizer and methanol by refining natural gas.
The report states the province should leverage current transportation and power line projects to ensure pipeline and power supply to potential expansions.