June 12, 2018
According to a recent announcement from the Province of Alberta, new jobs and more private investment will be just some of the benefits of a more diversified energy sector, thanks to three new incentive programs created through the Energy Diversification Act.
The legislation, passed June 6, includes three new programs that provide a combination of royalty credits, grants and loan guarantees designed to encourage energy diversification, like petrochemicals and partial upgrading.
“Supporting energy diversification means supporting good jobs for working families and Albertans,” says Margaret McCuaig-Boyd, Minister of Energy for Alberta. “We’re acting to ensure Alberta is competitive for major private investments and to build an economy to last. This is an exciting moment to push Alberta’s energy sector forward.”
In total the $2-billion investment is available for private industry to apply for under:
• Round 2 of the Petrochemicals Diversification Program;
• The Petrochemicals Feedstock Infrastructure Program; and
• The Partial Upgrading Program.
Industry can submit applications for the Partial Upgrading Program until Sept. 4, and can submit applications to the Petrochemicals Diversification Program and Petrochemicals Feedstock Infrastructure Program until Oct. 1. Evaluation will begin once the application seasons close. A decision on successful applicants is scheduled for late this year.
The three programs are estimated to attract more than $10 billion in private investment, support roughly 8,000 construction jobs and create hundreds more operational jobs.
Petrochemicals are Alberta’s largest manufacturing industry, supporting roughly 7,600 skilled jobs and $8.2 billion in exports every year.
Round 2 of the Petrochemicals Diversification Program will build on the success of the first round and expand its scope. Applications will now be accepted that involve the use of ethane (used to manufacture products like plastic), as well as methane (used primarily as fuel, and to manufacture chemicals like ammonia) and propane (for heat and fuel). These are petrochemical feedstocks derived from natural gas. Applications to increase production at existing facilities will now also be allowed, after being excluded in the first round of the program.
The first round of this program in 2016 led directly to Inter Pipeline’s final investment decision on its $3.5-billion propane-to-polypropylene complex which is under construction in the Industrial Heartland near Fort Saskatchewan. At the peak of construction, an estimated 2,300 direct full-time jobs will be created and, once complete, the facilities will employ 180 people. A second proposed project from Canada Kuwait Petrochemical Corporation is undergoing front-end engineering design work for its project. A final investment decision is expected by early 2019.
In order to ensure Alberta continues to have a strong supply of the building blocks needed for petrochemicals manufacturing, the Petrochemical Feedstock Infrastructure Program was created.
It will encourage industry to move forward on the facilities and infrastructure needed to capture more natural gas liquids required for value-added development.
These developments could include new natural gas processing facilities, smaller projects built closer to wellheads or straddle plants, facilities that are built along major natural gas pipelines that can extract certain components during transportation.
Partial upgrading is a process that reduces the thickness of oil sands bitumen so it can flow through pipelines more easily, without having to be blended with diluent (a thinning agent such as naphtha). This process increases the volume of the bitumen product as well increasing its value.
Partial upgrading would enhance oil sands industry competitiveness by reducing industry costs, increasing pipeline capacity and enabling more refineries to process Alberta bitumen products. It would not limit future opportunities for full refining within Alberta.
The Partial Upgrading Program will support projects to develop this emerging technology in Alberta.
In May, industry was given an opportunity to review the draft application guidelines to ensure they were compatible with industry needs. More than 30 responses were received from companies across the three programs, foreshadowing a strong level of interest among investors.