Alberta Opens Act 2 of Petrochemical Diversification

The government of Alberta moved March 8 to the second stage of a petrochemical diversification program aimed at generating new demand for the province’s natural gas reserves and enhancing its existing petrochemical industry.

On the first day of the spring session of the provincial legislature, the government introduced Bill 1, The Energy Diversification Act which, if passed, would launch a second round of the Petrochemicals Diversification Program and establish a Feedstock Infrastructure Initiative to help deliver the natural gas components needed for ongoing petrochemical development.

“We’re taking bold steps to help the energy industry innovate and diversify,” energy minister Margaret McCuaig-Boyd said. “These measures are not one-off fixes – they’re part of our made-in-Alberta plan for a more diversified and resilient economy that’s built to last – one where no Albertan is left behind.”

In the first round of the diversification program, Alberta offered up to C$500mn in royalty credits to companies that were prepared to invest in new methane- or propane-based projects and eventually selected two projects.

The first, Inter Pipeline’s C$3.5bn propane dehydrogenation and polypropylene facility, is under construction near the provincial capital of Edmonton, while FEED work is underway on Pembina Pipeline’s proposed integrated propylene and polypropylene production facility, a joint venture with a subsidiary of Kuwait Petroleum valued at between C$3.8bn and C$4.2bn. The partners are expected to take FID later this year.

The Inter Pipeline project received $200mn in royalty credits, while the Pembina project was awarded C$300mn. Both projects will use propane as feedstock, derived in part from liquids-rich natural gas, production of which has increased significantly in recent years.