Alberta invests in new propane-consuming petrochemical projects

The Government of Alberta’s Petrochemicals Diversification Program has approved $500 million in royalty credits for two propane dehydrogenation (PDH) projects, which will process propane extracted from natural gas resources into plastics products, in Alberta, Canada.

The first project is a joint venture between Pembina Pipeline Corp. and Petrochemical Industries Co., which have been approved to receive up to $300 million for an integrated PDH and polypropylene facility in Alberta’s Sturgeon County. Pembina expects to construct the facility on land it already owns near its Redwater Fractionation complex. The $4 billion project is expected to consume about 22,000 barrels of propane per day. Construction is expected to start in 2019, with the facility operating by 2021.

The government also approved a project by Inter Pipeline, which will receive $200 million in royalty credits to build a $1.85-billion facility in Alberta’s Strathcona County, near Fort Saskatchewan, Alberta, Canada. The Inter Pipeline facility would process about 22,000 barrels per day of propane into propylene. Construction is expected to start in 2017, with the facility operating in 2021.

“Alberta is a particularly attractive location for a world-scale propane dehydrogenation facility, given the ample supply of low-cost propane feedstock,” says Christian Bayle, president and CEO of Inter Pipeline. “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.”

The Petrochemicals Diversification Program received 16 applications locally and from across the globe, representing more than $20 billion in potential new investment interest in Alberta’s petrochemicals industry. Each application was evaluated as part of a competitive process to ensure the proposed project was economically viable, meets Alberta’s environmental performance conditions and demonstrates the best overall benefits to Alberta. The award is designed to help create jobs, attract investment and diversify Alberta’s economy by providing royalty credits once approved projects are completed and feedstock consumption begins.