With an announcement in late 2023 by Dow Chemical that it would be undertaking an enormous expansion of its ethylene production site in Fort Saskatchewan, AB, it was immediately clear that Alberta’s ethane supplies would need to increase by a significant 110 Mb/d. As we’ll discuss in today’s RBN blog, a deal was signed in February between Dow and Pembina Pipeline Corp. that calls for the midstreamer to provide up to 50 Mb/d of additional ethane supplies and, according to executives at Pembina’s investor day earlier this month, will require the company to invest between C$300 million (US$220 million) and C$500 million (US$367 million) to build out its existing NGL/ethane infrastructure.
Alberta, Canada’s energy-producing powerhouse, is also home to a large and sophisticated petrochemical industry. Since the 1970s, the industry has relied on an abundance of ethane, which like other NGL “purity products” is extracted from the raw (or unprocessed) gas that also contains a mix of methane (the primary component of natural gas) along with other liquids such as propane, butane and condensate (with that last one usually referred to as natural gasoline in the U.S.). The extraction of some portion of these purity NGL products from the raw gas stream is necessary to meet specifications for transportation in pipelines and for use by downstream consumers. Ethane typically accounts for the largest portion of the liquids that can be extracted from the raw gas and can be sent to nearby petrochemical plants for use as a feedstock for more complex chemical molecules such as ethylene. Ethylene forms the basis for the manufacture of everyday plastics such as bottles, grocery bags, food packaging and many other products.
Alberta hosts four large ethylene plants — three at Joffre owned and operated by NOVA Chemicals (green dot in Figure 1) and a fourth owned and operated by Dow Chemical in Fort Saskatchewan (red dot). The Joffre complex is estimated to have an ethane intake capacity of 180 Mb/d, while the Dow site pulls in up to 95 Mb/d, for a total of 275 Mb/d. According to Pembina, all these facilities receive ethane via the company’s Alberta Ethane Gathering System (AEGS; purple lines) and the pipelines that feed AEGS.
Figure 1. Western Canada Ethane Infrastructure. Source: RBN
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