Attracting investment in petrochemicals

Minister of Energy Sonya Savage and Associate Minister of Natural Gas Dale Nally confirm government’s commitment to the Petrochemicals Diversification Program.

This important program encourages investment, diversifies the economy and creates jobs for Albertans.

It supports privately funded large-scale projects by providing royalty credits to companies that build facilities to turn ethane, methane and propane feedstocks into products such as plastics, fabrics and fertilizers. Royalty credits are issued once projects become operational.

“Albertans elected our government to fight for our energy sector and get Albertans back to work. We promised Albertans that we would respect agreements made under the Petrochemicals Diversification Program and look at extending the royalty tax credit model to incent future projects.”

Sonya Savage, Minister of Energy

Round 2 of the program was originally announced in 2018. Of the $1.1 billion committed, only $150 million had been confirmed to date, with decisions on other applications on hold. By confirming this commitment, government will now resume its consideration of current submitted applications.

“Downstream chemical and petrochemical production and operations are a significant contributor to Alberta’s economy, and the sector continues to play an important role in attracting investment to Alberta. We’re acting on the Natural Gas Advisory Panel’s recommendation to encourage petrochemical development, and I’m confident this program will further restore Alberta’s reputation with investors as a good place to do business.”

Dale Nally, Associate Minister of Natural Gas

“Alberta is an ideal location for investors who are interested in taking advantage of Alberta’s vast energy resources to build new petrochemical plants. In addition to having attractive feedstock and utility costs, Alberta is home to a highly skilled workforce and has access to international markets for high-value petrochemical products.”

David Chappell, chair, Resource Diversification Council

Through this program, government is keeping its promise to implement recommendations from the Natural Gas Advisory Panel. The recommendations include encouraging in-demand Alberta projects via royalty and investment credits and continuing existing value-add initiatives.

The province is discontinuing the Petrochemicals Feedstock Infrastructure Program and the Partial Upgrading Program. These programs rely on grants and loan guarantees, and carry a higher financial risk to government – and ultimately, to Albertans.

In addition, the province will not continue with the request for proposals for refinery projects, which would have also included potential government support.

Since May 2019, government has taken a series of actions to encourage investment in Alberta, including cancelling the provincial carbon tax, reducing the corporate tax rate, reducing red tape and passing the Royalty Guarantee Act.

Background

  • Alberta is home to Canada’s largest petrochemicals manufacturing industry – the largest manufacturing sector in Alberta.
  • Centres with petrochemicals investment potential in Alberta include Edmonton, Fort Saskatchewan, Joffre, Grande Prairie and Medicine Hat.
  • Alberta’s petrochemicals sector processes components of natural gas into products such as fertilizer (from methane), methanol (from methane) and polyethylene plastic (from ethane).
  • Round 2 of the Petrochemicals Diversification Program will provide $1.1 billion in royalty credits. To date, $150 million in credits have been approved.

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