Pembina plans to proceed with project
A $4.5-billion Alberta project to turn propane into plastic will help deliver world prices to land-locked Western Canadian oil and gas producers, says Calgary-based Pembina Pipeline Ltd.
The company announced Monday it has decided with its joint venture partner, Kuwait’s Petrochemical Industries Co., to go ahead with their proposed integrated propane dehydrogenation plant and polypropylene upgrading facility northeast of Edmonton.
The plants’ plastic pellets will be sent by rail and shipping containers to manufacturers around the world to be turned into recyclable products used in automobiles, medical devices, food packaging and home electronic appliances.
“Sanctioning of the PDH/PP facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers’ hydrocarbons produced in Western Canada, and provides another exciting platform for future growth,” said Pembina CEO Mick Dilger in a news release.
Petrochemical Industries CEO Mohammed Abdullatif Al-Farhoud added in the same release that the facility is “ideally aligned with PIC’s continued pursuit of sustainable and globally diversified growth.”
Pembina was awarded $300 million in royalty credits in 2016 as an Alberta government incentive for the project.
At the same time, Calgary-based Inter Pipeline Ltd. got $200 million in credits for its nearby $3.5-billion polypropylene project, which is now under construction.
The credits allow producers to reduce their royalty payments to the government and, as such, can’t be claimed by the petrochemical plants themselves.
However, Pembina said Monday it has made agreements with producers to “monetize” 80 per cent of the credits over the first several years of operation of the facility, which is expected to be in-service in mid-2023.
Pembina’s share of the project’s capital costs will be $2.5 billion including a 50-per-cent interest in the joint venture, which will own the plants, and a 100-per-cent stake in the supporting facilities.