You Raise Me Up - Alberta Looks to Further Incentivize More Petrochemical Development

Petrochemicals form the backbone of modern consumer society. They provide the plastics and other materials needed to make most of the products we depend on, everything from computers and cellphones to car tires and fertilizer — not to mention N95 masks and other personal protective equipment. Petrochemicals come from crude oil, natural gas, and/or NGLs like ethane and propane, of course, and a good way for an energy-producing area to add value to its raw hydrocarbons is to develop petchem plants nearby. Alberta, Canada’s leading energy-producing province, is making a new push to encourage such projects. Today, we discuss the latest provincial program and what it hopes to accomplish.

Hydrocarbon-rich counties, states, provinces, or entire countries can reap huge benefits by exploiting their natural resources — energy production and pipelines can support a large number of good-paying jobs and generate a lot of tax revenue. But being a mere supplier of raw hydrocarbons to far-away refineries, petrochemical plants, and manufacturing facilities that convert oil, gas, and/or NGLs into higher-value products isn’t nearly as lucrative as having those value-adding assets in place and operating within your borders. With abundant production of natural gas and especially NGLs such as ethane and propane, the Canadian province of Alberta would seem like a great location for the construction of a wide range of petchem plants, including steam crackers. In fact, Alberta’s local ethane production — plus ethane imports from the U.S. — for years have supported four large, ethane-consuming crackers in the province: Dow’s plant in Fort Saskatchewan, Nova Chemicals’ two plants in Joffre, and a plant co-owned by Dow and Nova, also in Joffre. Also, to add value to the ethylene coming out of those crackers, there are a number of polyethylene and ethylene glycol plants in Alberta — the more value added, the more jobs and tax revenue.

As Alberta’s energy production continued growing through the 2010s, the provincial government has made a number of moves to encourage the development of in-province petchem production. Back in 2016, the province’s Petrochemicals Diversification Program (PDP) helped to incentivize and lay the groundwork for the construction of two multibillion-dollar, propane-consuming plants:

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