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Petrochemical projects provide propane-powered profit for Alberta economy

Thousands of jobs expected during construction, along with many long-term positions

Alberta's economy is on track to get a propane-powered boost thanks to a pair of new projects announced by provincial officials under the Petrochemicals Diversification Program. Announced in February of 2016, the program is providing royalty credits to the pair of operations that will take propane extracted from natural gas resources and produce value-added plastics products used all over the world every day.

The first project is a joint venture between Pembina Pipeline Corporation and Petrochemical Industries Company (PIC), which has been approved to receive up to $300 million in royalty credits to build an integrated propylene and polypropylene facility in Alberta’s Sturgeon County. The project is expected to cost from $3.8 billion to $4.2 billion to build.

“This government is committed to diversifying our energy industry and creating good energy industry jobs. These investments will help create world-class petrochemical facilities, diversify our energy economy and create thousands of high-paying, skilled jobs in Alberta,” said Margaret McCuaig-Boyd, Alberta Minister of Energy.

During construction of the Pembina/PIC facility, there would be an average of 2,000 to 2,500 workers on site, with more than 150 full-time operations and head office jobs upon completion. The facility would process about 22,000 barrels per day of propane into polypropylene, the plastic material used in the manufacturing of a variety of products such as automobile parts, containers and Canadian bank notes. Construction is expected to start in 2019, with the facility operating by 2021.

“We are honoured that the Government of Alberta selected our proposed project to be the recipient of $300 million in royalty credits under the Petrochemicals Diversification Program," said Mick Dilger, Pembina President and CEO. "This program shows leadership on behalf of the Province and will go a long way to ensuring Alberta's economy continues to diversify and grow by enabling projects such as ours to be more competitive in today's global market.”

The second project, by Inter Pipeline, has been approved to receive up to $200 million in royalty credits to build a $1.85-billion facility in Alberta’s Strathcona County. At the peak of the three year construction phase 2,000 full-time equivalent jobs would be created. About 1,600 of those would be at the site and the rest would be in fabrication or module shops and engineering firms. An additional 95 full-time operations positions would be created upon project startup.

“Alberta is a particularly attractive location for a world-scale propane dehydrogenation facility, given the ample supply of low-cost propane feedstock. A propane dehydrogenation facility and associated derivative facilities are an innovative way to provide a new market for Alberta propane, create jobs and help diversify our energy based economy,” said Christian Bayle, Inter Pipeline President and CEO.

The Inter Pipeline facility would process about 22,000 barrels per day of propane into propylene, a feedstock for the production of polypropylene and other derivatives. Construction is expected to start in 2017, with the facility operating in 2021.

Program created to diversify petrochemical operations

The Petrochemicals Diversification Program was created to encourage companies to invest in the development of new Alberta petrochemical facilities by providing royalty credits up to $500 million. Under the program, royalty credits are only provided after construction is completed and a facility is operating.

“Our Jobs Plan is attracting investment to our province and building an economy for the future through initiatives like the Petrochemicals Diversification Program," said Deron Bilous, Minister of Economic Development and Trade. "These new facilities will help us diversify the type of energy we produce right here in Alberta and also create thousands of jobs to get us back on our feet. I was impressed by the many project proposals that were received and we are committed to encouraging continued growth in Alberta’s petrochemical sector.”

Naushad Jamani, Chair of the Resource Diversification Council and senior vice president, olefins and feedstock with Nova Chemicals, said these successes are a big step forward in diversifying Alberta's energy sector.

"The Resource Diversification Council is very supportive of the government’s decision to provide the required incentives to encourage this investment by industry to build world-scale petrochemical plants in Alberta," Jamani said. "This is also an important step in generating greater value for our energy resources, building long term jobs and secondary industries, while securing a larger share of world markets for our refined energy products.”

While there is no plan currently to extend the Petrochemical Diversification Program, the government is looking to build on the interest this program has generated and explore other investment opportunities with petrochemicals that will benefit Albertans.

“This is great news for Alberta's Industrial Heartland and great news for our entire province," said Councillor Ed Gibbons, Chair, Alberta’s Industrial Heartland Association. "These new petrochemical facilities will create stable jobs and new value chains that will benefit Albertans for decades to come. We commend the province on moving forward with this program‎ and thank the companies involved for making Alberta's Industrial Heartland their location of choice."

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