Petrochemical upgrading program gets $1B boost
Premier announces cash infusion in effort to battle price differential
Premier Rachel Notley is injecting $1 billion into a petrochemical upgrading program as energy producers struggle with a troubling oil price differential.
“We’re facing pretty stiff headwinds right now with what’s going on with the differential,” Notley told reporters Tuesday, following a speech at a Rural Municipalities of Alberta (RMA) convention in downtown Edmonton.
In her speech, she announced additional investment for a petrochemical upgrading program that launched in 2016 and includes royalty credits, grants and loan guarantees. The second phase of the program announced in March now totals $2.1 billion.
Initially the program doled out $500 million in royalty credits to two pipeline companies to build propane-processing plants.
Tuesday ’s announcement means a further $1 billion in funding on top of the $1.1 billion set aside in the March budget.
“That first plan in 2016 generated the project that’s happening just outside of Edmonton now ... it’s the first plant of its kind in Canada to start creating plastics out of natural gas,” Notley said, referencing the Inter Pipeline’s petrochemical complex.
“It’s something that is booming in the U.S. that we haven’t been successful with in Canada.”
Alberta has received 23 applications for petrochemical upgrading projects, representing more than $60 billion in potential investment in the energy sector, according to the province.
“These kind of investments and creating value-added processes ... are a great tool for advancing the province,” said RMA President Al Kemmere.
ENVOYS APPOINTED TO ADDRESS OIL DIFFERENTIAL
Notley’s speech repeated messages on the importance of pipeline access and the need to close the oil differential. The price discount for Western Canadian Select heavy crude has been sitting at around US$40 a barrel.
On Monday, she appointed three envoys who she said would talk to industry leaders and work on short-term solutions. They included University of Calgary School of Public Policy executive fellow Robert Skinner, Notley’s former chief of staff Brian Topp and deputy minister of energy Coleen Volk.
UCP Leader Jason Kenney sent a letter to the premier, saying he wanted to work collaboratively with the government on the issue. He also called on oil producers to make voluntary production cuts, but stopped short of suggesting the government step in.
“That was also paired with a number of attacks on the envoys ... and oppositional statements from his house leader suggesting that, in fact, the whole process was not particularly worthy of time or consideration,” Notley told reporters Tuesday.
UCP House Leader Jason Nixon had said the premier’s plan was “too late” and slammed the appointment of Topp, who has deep roots in the NDP.
“Perhaps the UCP ought to focus on figuring out internally where they stand on the matter before offering themselves up as parties to the dispute resolution,” Notley said.