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Alberta dangles petrochemical incentives Energy Minister Mel Knight said as many as six new petrochemical projects were holding for release of province’s incentive program Gary Park For Petroleum News
As many as six new petrochemical projects are on the verge of proceeding now that the Alberta government has taken steps to improve security of access to ethane, the province’s sole feedstock.
The long-awaited policy offers 10 years of incentives to keep value-added production and the consumption of ethane within Alberta.
By offering royalty credits that could total C$350 million over the next decade, the government hopes to boost Alberta’s ethane supplies by 60,000 to 85,000 barrels per day.
Energy Minister Mel Knight, without naming the companies, said he was aware of as many as six new petrochemical projects that have been on hold pending release of the incentive program.
He said applications are likely from an array of domestic and international companies for projects that could consume 7,000-10,000 bpd of ethane.
Under the policy credits will be sold to gas producers to offset their gas royalty obligations.
Over the next five years, the producers will be eligible for credit of C$1.80 per thousand cubic feet for ethane utilized by petrochemical producers over their current consumption levels.
But the arrangement will be limited to C$35 million a year and C$10.5 million for individual projects to ensure the policy is widely available.
Knight said the incentives — dismissed by some critics as subsidies — are part of the government’s efforts to capture more of the value-added end of raw bitumen, light oil and heavy oil and should establish a base for a winter petrochemical and plastic industry.
Sector employs 6,500 Currently, the sector employs 6,500 people in Alberta and produces 8.6 billion pounds of chemicals and chemical products a year carrying a value of C$13 billion, of which C$6 billion are exported.
He said that as bitumen upgrading builds in Alberta there will be opportunities to use the off-gases and other byproducts for petrochemical production.
But he said the province needed a policy to overcome the growing shortfall of ethane supplies, with gas production from the Western Canada Sedimentary basin forecast to decline by 2.2 percent a year.
Knight said projects can qualify for credits so long as they are linked to petrochemical production and will be judged on their merits, including the number of jobs they will create.
Topping the list of petrochemical companies with expansion plans is Nova, along with gas processor Aux Sable Canada, which said it plans to unveil a timetable and costs for a 40,000 bpd ethane extraction facility that could process 1.2 billion cubic feet per day of gas by mid-2010.
Aux Sable is also involved with merchant upgrader BA Energy to extract products from the Heartland Upgrader which will convert bitumen into refinery-ready synthetic crude.
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