Overview

The Petrochemicals Diversification Program is part of the Made-in-Alberta energy strategy that provides up to $1.1 billion in royalty credits to encourage companies to build manufacturing facilities that turn ethane, methane and propane feedstocks into more valuable products, such as plastics, fabrics and fertilizers.

Petrochemical manufacturing is the largest manufacturing sector in Alberta – thanks to our large supply of natural gas and natural gas liquids. It directly employs more than 7,500 people and exports $8.2 billion worth of goods each year.

This program is one of a number of programs under the Made-in-Alberta energy strategy. The other two programs are:

Successful projects

Successful projects were selected following two rounds of a competitive application process, held in 2016 and 2018.

  • Round two results

    The second round of the program closed October 1, 2018. Two successful projects have been selected.

    Inter Pipeline

    • Will receive up to $70 million in royalty credits to build an estimated $600-million acrylic acid facility in Alberta's Industrial Heartland near their Heartland Petrochemical Complex 12 km north of Fort Saskatchewan.
    • Create nearly 600 construction jobs and 50 full-time jobs once the facility is operational in 2022.
    • Convert 60,000 tonnes per year of propylene and produce 80,000 tonnes per year of acrylic acid, a value-added product used to make plastics, coatings, adhesives, diapers, floor polishes and paints.

    Interpipeline Acrylic Acid Project profile (PDF, 238 KB)

    Nauticol Energy

    • Will receive up to $80 million in royalty credits toward the first phase of a project to build a $2-billion methanol plant south of Grande Prairie. Phase one is expected to have an initial capital investment of $800 million.
    • Create more than 1,000 construction jobs and more than 100 full-time jobs once the facility is operational in 2022.
    • Convert 100 million cubic feet per day of Alberta’s natural gas into methanol, a value-added product used to make fuels, electronics, antifreeze and construction materials like plywood subfloors.

    Nauticol Energy Methanol Project profile (PDF, 221 KB)

  • Round one results

    Two projects were selected under the first round of this program, which closed in 2016.

    The projects attracted more than $8 billion in new private investment and will create up to 5,300 jobs during construction and 380 full-time jobs once operations begin.

    Canada Kuwait Petrochemical / Pembina Pipeline Corp.

    • Canada Kuwait Petrochemical, which includes Calgary-based Pembina Pipeline Corp, will receive up to $300 million in future royalty credits to build a $4.5-billion dehydrogenation and polypropylene facility in Sturgeon County.
    • Once operational, this facility will process about 23,000 barrels per day of propane into polypropylene – a higher-value plastic material used to make products such as kids’ toys and electronics.
    • Construction on this facility is expected to start in 2019, with the facility fully operational by 2023.

    Inter Pipeline

    • Calgary-based Inter Pipeline will receive up to $200 million in future royalty credits to build an integrated petrochemicals complex that will process propane into value-added plastics products.
    • Construction on the $3.5-billion facility in the Industrial Heartland has begun. Watch the video.

How it works

Approved projects will be awarded royalty credits after petrochemical plants are built and operational. A total of $1.1 billion is available.

While petrochemical facilities do not pay royalties, they can trade royalty credits with oil and natural gas producers who do. The producers can use these credits to reduce its royalty payment to offset the cost of extracting natural gas and oil.

Proposals were accepted for projects that involve the following value chains:

  • ethane - used to create components needed for plastics, detergents, lubricants and other household projects
  • methane - used primarily as fuel and to manufacture chemicals like ammonia (round two only)
  • propane - used for heat and fuel and to create components needed for manufacturing plastics

Application process

The call for applications for round two closed on October 1, 2018. Approved projects will be announced as they are selected.

  • Applications are reviewed by a third-party monitor to ensure a fair and transparent evaluation process.
  • Applications are then evaluated against a set of 8 major criteria and ranked by performance.
  • Top ranked projects engage in negotiations to be considered for approval under the program.

Petrochemicals Diversification Program Round 2 application and guidelines (PDF, 71 KB)

Petrochemicals Diversification Program clarification (PDF, 128 KB)

Contact

Email: energy.edprograms@gov.ab.ca

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