Pembina eyes another petrochemical project

Days after signing off on a $4.5-billion propane-to-plastics plant in Alberta, the top executive at Pembina Pipeline Corp. said he’s been fielding calls about building another petrochemical plant.

“The phone is ringing, not just for propane but for ethane as well,” Pembina president and CEO Mick Dilger said.

On Monday, Pembina and jointventure partner Petrochemical Industries Co. of Kuwait said they would build a $4.5-billion plant outside of Edmonton to capitalize on an abundant supply of propane in Alberta to make polypropylene, used in plastic products like grocery bags and car parts. Days after that decision, Dilger said there’s also an opportunity to get involved in another petrochemical project, but instead of using propane as an input, the plant would tap the province’s abundant ethane output. Ethane can be upgraded into polyethylene, which is used to make a range of products including plastic construction materials like drain pipes, garbage bins and cutting boards.

Both ethane and propane — as well as methane, butane and pentane — are by-products of drilling for natural gas in northwestern Alberta and northeastern British Columbia.

Dilger would not say whether Pembina was one of the firms that had submitted a proposal for an ethane petrochemicals project to the Alberta government, but noted that Pembina has studied the potential for investing in such a project. “You probably wouldn’t see Pembina doing something on its own, but we could do something with an industry-expert partner,” he said.

But it may face intense competition from rivals.

There is so much propane, ethane and methane available in the province at low prices that chemical companies have submitted a total of 23 proposals to the Alberta government in an attempt to access $2.1-billion in royalty credits and other supports for projects that would cost a cumulative total of $60 billion to build.

The Alberta government, which did not respond to a request for comment, is expected to announce the winners of the funding through its petrochemical diversification plan in the coming weeks.

If the Royal Dutch Shell Plc-led $40-billion LNG Canada project is built as planned, there could be a market for two more polyethylene plants in Alberta as a result of additional natural gas drilling, Masterson said.

The additional drilling would produce more propane, ethane and methane and potentially plants to process those liquid hydrocarbons.