Pembina moving forward with propane dehydrogenation facility

Pembina Pipeline Corp. and Petrochemical Industries Co. K.S.C. (PIC), a subsidiary of Kuwait Petroleum Corp., are proceeding with the development of a proposed propylene and polypropylene production facility in Sturgeon County, Alberta, Canada.

Pembina and PIC put together a feasibility study for the evaluation of a combined propane dehydrogenation and polypropylene upgrading facility in 2016. The companies entered into a joint-venture agreement to develop the facility, and they’ve formed Canada Kuwait Petrochemical Corp. (CKPC) to perform front-end engineering design for the project, Pembina says.

“The encouraging results of the recently completed feasibility study, the previously announced award of $300 million in royalty credits from the Alberta government’s petrochemicals diversification program and a joint venture with our world-class partner, PIC, gives Pembina the confidence to further advance the project,” says Stuart Taylor, senior vice president of NGL and natural gas facilities at Pembina. “This project represents a material extension of our natural gas liquids value chain strategy and creates a significant incremental local market for western Canadian hydrocarbons.”

The proposed propane dehydrogenation and polypropylene facility is expected to consume 22,000 barrels per day of Alberta-produced propane, Pembina says. Pembina plans to source the propane for the facility from its Redwater Fractionation complex, as well as other regional facilities. The project is anticipated to produce about 1.2 billion pounds of polypropylene per year, the company adds.

The anticipated cost of the front-end engineering design is expected to represent about 2 to 2.5 percent of the project’s current cost estimate. The preliminary capital cost estimate of the project is $3.8 to $4.2 billion, according to Pembina.

Front-end engineering design activities will likely be completed by late 2018, followed by a final investment decision from each partner, Pembina adds.

“PIC is looking forward to progressing the development of this project into [the front-end engineering design] stage,” says Hosnia Hashim, PIC’s deputy CEO of olefins and aromatics. “Establishing a joint venture with Pembina and investing in a large-scale, value-addition project will contribute to PIC’s continued pursuit of sustainable and globally diversified petrochemical growth.”