Two Alberta petrochemical plants to get up to $500 million in incentives

Two new petrochemical projects in Alberta will qualify for up to $500 million in royalty credits under the province’s new petrochemicals diversification program.

The first project is a joint venture between Calgary-based Pembina Pipeline Corporation and Petrochemical Industries Company, based in Kuwait, to build a new facility in Sturgeon County. With construction costs estimated at between $3.8 billion to $4.2 billion, the facility will process 22,000 barrels per day of propane into polypropylene. Construction is expected to start in 2019, with the facility operating by 2021. The plant has been approved to receive up to $300 million in royalty credits under the diversification program.

The second project, by Calgary-based Inter Pipeline, has been approved for up to $200 million in royalty credits. Inter Pipeline plans to build a $1.85-billion facility in Strathcona County to process 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 in production by 2021.

The petrochemicals diversification program was created early in 2016 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.