The global petrochemical is currently experiencing a downturn, and this is showing up in earnings. These companies are reacting with cost reductions and capacity rationalizations.
Alberta’s petrochemical industry received bad news in late April when Dow, one of the world’s largest petrochemical companies, announced that it was delaying construction on an immense expansion of its ethane cracker in Fort Saskatchewan, AB, only a little more than a year after sanctioning the project. Although the length of the delay remains uncertain, the slowdown has created unwanted ripples across other projects that were tied to the expansion, especially for companies working to provide a substantial increase in ethane and natural gas supplies that will be required by the project. In today’s RBN blog, we take a closer look at the delay and what it might mean for Alberta’s energy industry.
The Trump administration’s approach to economic policy — including tariff threats to longtime allies backed by sometimes shifting policy goals — might be a sound tactical move in the long run by keeping negotiators on edge and extracting better deals. But that approach has also heightened the sense of uncertainty about where things are headed, affecting investment and long-term planning. In today’s RBN blog, we discuss how economic policy uncertainty has increased in the past few months and how it’s impacting activity in the energy sector.
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.
The demand for ethane by Alberta’s petrochemical industry has experienced a slow expansion in the past 20 or so years. However, that demand is likely to increase sharply by the end of the decade now that Dow Chemical has sanctioned a major expansion at its operations in Fort Saskatchewan, AB, that will more than double the site’s ethane requirements. As we discuss in today’s RBN blog, this will call for an “all-hands-on-deck” approach to increasing Alberta’s access to ethane supplies from numerous sources.
