Alberta unveils $500 million subsidy for companies building petrochemical processing plants
Geoffrey Morgan | February 1, 2016 5:36 PM ET
Bloomberg Currently, there are 8,000 direct and 40,000 indirect petrochemical processing jobs in Alberta.
CALGARY – Petrochemical companies have begun lining up to apply for the Alberta government’s new $500-million subsidy program intended to bring more “value-added” jobs to the province.
Alberta Economic Development and Trade Minister Deron Bilous and Energy Minister Marg McCuaig-Boyd announced the new program Monday, which would give companies building new petrochemical plants a total of $500 million in royalty credits.
The credits could be sold to energy companies that extract oil and gas in the province, and some executives say the program would help them build new projects in Alberta.
Williams Energy Canada ULC president David Chappell said his company is planning to make a final investment decision on a propane-processing plant north of Edmonton this year and the subsidy program announced Monday could provide the project a boost because “it’s hard to compete against jurisdictions like the U.S. Gulf Coast.”
“It’s a whole new petrochemical value chain for Alberta and Canada,” Chappell said, adding the company will review who qualifies for the program, but is interested in making an application.
Tulsa, Okla.-based Williams is planning the propane-processing plant as part of a larger $3-billion petrochemical complex near Edmonton that would turn propane into plastic pellets, used to create consumer products like yogurt containers.
At the peak of construction, Chappell said the complex would require 1,600 construction workers and about 1,000 workers in fabrication yards. When it’s complete, he said the complex would create 150 permanent jobs.
He also said the complex would produce 450,000 tonnes of plastic pellets every year, and would help correct Canada’s trade imbalance for that type of plastic.
Canada currently imports 600,000 tonnes of the pellets – made from a propane derivative called polypropylene – each year.
Bilous said the credit-for-processing program aims to create 1,000 new jobs and 3,000 temporary construction jobs, and is a key part of the NDP’s platform of creating more value-added jobs in Alberta.
The program is specifically targeted at propane and methane processing facilities.
Vancouver-based Methanex Corp. has also been considering expanding its existing methane-processing plant in Medicine Hat, Alta.
“It is our desire to continue to add value to the Alberta economy through our ongoing and potential future operations,” the company’s vice-president for North America Kevin Henderson said in an email, adding that Methanex is reviewing the program details this week.
Applications for the program are due at the end of March, and the province will announce which companies have been awarded the subsidies in April.
Asked why the petrochemical sector needs to be subsidized in Alberta when companies are already operating here and interested in expanding, Bilous said, “it goes back to the fact that Alberta faces some challenges versus our biggest competitors in Texas and Louisiana.”