EDMONTON - Once called “Upgrader Alley” because of the half-dozen bitumen processing plants proposed for the Fort Saskatchewan-Redwater region, the area may soon earn a new name.

An ocean of cheap natural gas has flooded the marketplace, thanks to new fracking technology, which is opening once-inaccessible reservoirs in the U.S. and Canada.

And Alberta is again attracting the interest of petrochemical companies seeking both the vast quantities of inexpensive ethane from this gas, and the new supplies of more costly natural gas liquids — butanes, propylenes and propanes — which will be removed from off-gases at the oilsands upgraders in Fort McMurray and shipped south.

“The fog is starting to lift and I think we’ll see some clearer directions in 2012,” said Neil Shelly, executive director of Alberta’s Industrial Heartland, a group of local municipalities that includes Edmonton.

“We will be more than just upgrader alley, but rather a hydrocarbon petrochemical complex.”

The region already boasts the Shell upgrader, refinery and petrochemical complex, the Dow ethylene facility and the Agrium fertilizer plants, among others. Dow and Agrium originally located in the region in the 1960s and 1970s because of cheap natural gas, as did the Celanese plant in Edmonton’s east end, which was closed several years ago and is being demolished.

With forecasts predicting many years of low natural gas prices, Shelly says that means Alberta can maintain its current petrochemical facilities. But the best news is what lies ahead.

“The level of general inquiries for investment around here has been picking up quite a bit. We are getting interest from firms which want to take advantage of our natural gas opportunities.”

As a basic feedstock for fertilizer, methanol and cellulose, “people are looking at northern Alberta because with a spot price of under $3 per Gj (gigajoule), we have some of the cheapest natural gas in the world.”

That approach got a boost this summer when Alberta revised its incremental ethane extraction program, which supports projects aimed at using the province’s ethane.

“It’s starting to bear fruit,” said Shelly.

And the first is the Williams Energy plan to invest $300 million to pipe more of the off-gas from Suncor’s upgrader to an expanded Redwater fractionation plant.

Shelly thinks few people outside the industry realize the significance of the Williams project, which will also include a pipeline tie-in to move the ethane to Dow and the Nova plant at Joffre.

“It is more important than just the $300-million plant. We are now getting these petrochemical feeds for various gases. And being able to have a source for the propylenes starts to open doors for us in a whole different petrochemical chain.”

Ethane is turned into ethylene, which is used to create a wide variety of vinyl plastic products (from coatings to plastic bags), while propylenes are turned into polymers, which are used to make everything from plastic parts to rope.

The Williams project at Suncor will initially be tapping only about one-quarter of the total potential from all oilsands upgrader (Syncrude, CNRL) off-gases, which are now burned at the plants to create heat. (Shell uses a different system, and upgrades at its Fort Saskatchewan complex.)

“We need a critical mass to support a new world-scale plant in this region, something of the size of another Dow. And we could have that from the off-gases that will become available,” added Shelly.

Another possibility is attracting a firm such as South Africa-based Sasol, which is a world leader, along with Shell, in converting natural gas to diesel fuel in a gas-to-liquids (GTL) process. Sasol recently invested in a major natural gas field in B.C., and has said it is evaluating the possibility of building a GTL plant in North America.

“There is a feeling in the global petroleum community that GTL will be a breakout technology for the world in the years ahead,” said Shelly.

But while natural gas will fuel future growth, it is bitumen upgrading that will provide the biggest construction boost to the region, when North West Upgrading begins its $5-billion gasifier project this spring. The joint venture has a 30-year agreement to process Alberta’s royalty bitumen into high-quality diesel fuel.

“While there may be labour shortages in Fort McMurray, there are a lot of tradespeople around here who want to work on local projects like the North West one. They have spent years in the camps and made a lot of money, now they are older and want to go home to their families at night,” said Shelly.

The Industrial Heartland group has hired consultants to examine the local situation with new feedstocks and local advantages, and the report is due later this month.

“I think that will give us some real idea of where we should be going in the year ahead,” said Shelly.

dcooper@edmontonjournal.com