Petrochemical producers are expected to increase investments in Alberta in the coming few years, with the prospects of additional feedstock becoming available and current market conditions favoring NGL and ethane extraction costs, a key provincial government official said Thursday.
"Drilling of liquids-rich gas in the province and [the likelihood of] additional volumes of offgas to be made available from the oil sands upgrading process is spurring interest in several companies, who are now assessing opportunities," Justin Riemer, assistant deputy minister at the province's Department on Enterprise, said in an interview from Edmonton.
The department facilitates energy investment in Alberta, including petrochemicals, and also acts as the province's prime economic development agency.
The province also has a one of the lowest baseline tax jurisdictions in North America and just recently unveiled major changes in the regulatory structure to streamline application processes and reduce timelines for project approvals, he said.
"In the past few months, officials from our department have traveled on missions to the Middle East and Europe to talk about investments opportunities in Alberta," Riemer said. "We are spending time with prospective investors to understand and estimate their feedstock requirements, besides other issues."
Early this year, the Alberta government set up a "special team" to identify opportunities for building new petrochemical capacity in the province beyond 2014.
"There is an indication that the current price environment will support and attract more investments and our aim is to open up the doors to producers keen on investing more in the value chain," Riemer said. "I am optimistic we will see more investments in the ethane and propane value chain, as an additional 110,000 b/d of off-gas is available in Alberta. Midstream gas companies are also working with us to investment in new NGL and ethane feedstock facilities."
INVESTMENT PLANS
Off-gas is a mixture of hydrogen and light gases, including ethane, butane, propane and butylenes produced from oil sands operations and also when bitumen is upgraded to synthetic crude oil and the current availability is about 55,000 b/d.
Existing petrochemical producers have already announced investment plans.
In late November, Williams Energy said it file an application in early 2013 to Alberta's Energy Resources Conservation Board to build new natural gas liquids and olefins processing facilities in the province.
Three facilities are planned to be built to tap offgas: an extraction plant at the Horizon oil sands upgrader operated by Canadian Natural Resources near Fort McMurray; a 70-km (45-mile) expansion of the Boreal NGL pipeline; and a debottlenecking of Williams' fractionation plant at Redwater.
The facilities are estimated to cost C$500 million-C$600 million ($502 million-$603 million) and the company will start up the facilities in second-quarter 2015 at 11,000-12,000 b/d, with output will be ramped up to 15,000 b/d of ethane, ethylene, propane and propylene by 2017, Williams Energy Canada President David Chappell said in an interview then.
"Investments are also planned by other players," Riemer said. "Nova Chemicals has disclosed a plan to expand its polyethylene production at Joffre, Methanex is planning a debottlenecking of its plant at Medicine Hat, while Dow Chemical has indicated they are looking at more feedstock to expand its 650,000 mt/y polyethylene plant at Fort Saskatchewan."
