|
Alberta luring petrochemical players
Province announces 10-year grant program for projects meeting criteria; watchdog organization concerned about ‘blank check’ aspect Gary Park for Petroleum News
Convinced it is hot on the trail of a “sky is the limit” investment opportunity, the Alberta government has rolled out a 10-year grant program to attract multibillion-dollar petrochemical projects.
When it is launched this fall, the Alberta Petrochemicals Incentive Program will offer government funding to every proposal that meets the government’s operational criteria, said Dale Nally, Alberta’s Associate Minister of Natural Gas.
He said the program will be open year-round for the next decade with no intermittent application deadlines, adding the government will not play a role in “picking winners and losers ... we’re going to let the market do that.”
As far as the government is concerned, the “sky is the limit,” Nally said, while declining to set an upper spending limit.
He said “we’re going to stop asking industry to revolve around a government schedule. We’re going to revolve around theirs ... based on industry needs, not government desires.”
New program provides grants Instead of offering royalty credits, the program will provide grants which Nally said could grow Alberta’s petrochemical sector by more than C$30 billion by 2030, creating more than 90,000 jobs, a figure tied to historical development of the sector and industry partner forecasts.
But he conceded that too many new projects could overheat the sector, which is why the government will closely monitor the industry response over the initial decade.
The program will operate in parallel with Alberta’s current C$1.1 billion petrochemical diversification program, which will continue to use royalty credits as an investment magnet.
Nally said the government’s objective is to make prospective investors “think Alberta first” rather than chasing the petrochemical hubs in Saudi Arabia and Louisiana.
Reliability of feedstocks Alberta believes it has established its reliability as a source of such petrochemical feedstocks as natural gas, methane, propane and ethane, which have seen the sector grow to account for one-third of the province’s manufacturing exports.
Canada ranks 17th in proven global natural gas reserves and, in 2018, was the world’s fourth-largest producer and sixth-largest exporter, 69% of which came from Alberta, with British Columbia and Saskatchewan making up the balance.
The Chemical Industry Association of Canada estimated Alberta’s chemicals sector is worth about C$12.1 billion and has created more than 58,000 direct or indirect jobs for Albertans.
In a 2018 report the International Energy Agency suggested petrochemicals will be a driving force of global energy demand, with plastics doubling in demand since 2000.
The IEA predicted the sector will consume an additional 56 billion cubic meters of natural gas by 2030, representing close to 50% of Canada’s total gas consumption at the time of the report.
“With our affordable 30-year supply of natural gas, technically skilled and educated workforce and respected innovation and research, Alberta is ready to seize the opportunity to become a global destination for petrochemical manufacturing,” Nally said.
Concern over costs The Canadian Taxpayers Federation voiced its concern over the absence of a cap on the program’s costs.
“We need to get the economy going again, but the answer is not to make struggling taxpayers sign a blank-check for another petrochemical corporate welfare program,” said the federation’s Alberta director Franco Terrazzano. “Premier Jason Kenney should stay focused on tax relief instead of risking tax dollars trying to play investment banker.”
He said the program is “privileging the petrochemical sector while making everyone else pick up the tab.”
| 