Adding More Value

When construction began on Inter Pipeline’s Heartland Petrochemical Complex, it was a welcome sight for advocates of capturing additional value from Alberta’s natural resources.

The complex is designed to capitalize on the province’s vast natural gas supply as the $3.5 billion facility will turn 525,000 tonnes of propane per year into polypropylene pellets for automobile plastics, medical supplies, home appliances, transparent containers, and numerous other applications.

Inter Pipeline’s plant, as well as other petrochemical plant projects, is a good story for Alberta; and a renewed incentive program from the provincial government is designed to make it a continuing story.

“The first wave of projects began decades ago, then another investment wave came near the new millennium,” says Dale Freitag, manager of planning services for Lacombe County, a rural municipality with a population of more than 10,000 people that’s spread across 2,964 square kilometres of central Alberta.

“Like the others, this third wave means tremendous work opportunities both in the short- and long-term.”

—Dale Freitag, manager of planning services for Lacombe County

In fact, more than half of Canada’s petrochemical capacity is located in Alberta, making the province a major supplier of petrochemical feedstock – the raw materials used for industrial processing.

“The ethylene, polyethelene, styrene, and many other products had a total export value in 2017 of $8.2 billion, plus the sector is responsible for 7,600 direct jobs, 1,500 of which are in central Alberta,” says Kimberley Worthington, executive director of the Central Alberta Economic Partnership, an alliance of 35 communities in central Alberta.

The petrochemical industry expanded further when Nova Chemicals finished the expansion of its Joffre plant, which is located in Lacombe County just east of the City of Red Deer. It’s estimated between 40 to 60 percent of the capital costs of the $1 billion project remained within the province.

Additionally, when the plant becomes fully operational and produces its target of 1 billion pounds of polyethylene annually, it will create about 60 full-time jobs.

“All of this will increase our tax base, which in turn will allow us to upgrade our infrastructure,” says Freitag.

Alberta’s provincial government helped continue this industry expansion when it introduced the Petrochemicals Diversification Program in 2016. The program included $500 million in incentives available for the construction of plants and two projects were born out of the program: the Inter Pipeline Heartland Petrochemical Complex and a joint partnership between Pembina Pipeline Corporation and Petrochemical Industries Co. of Kuwait.

The Pembina Pipeline and Petrochemical Industries Co. of Kuwait project is proceeding with engineering design of an integrated propylene and polypropylene facility with an output of about 1.2 billion pounds per year. The project is estimated to cost between $3.8 and $4.2 billion.

Inter Pipeline’s complex is currently under construction and is expected to be operational in late 2021. The company estimates 13,000 direct and indirect construction jobs will be generated by the project, and, once operational, there will be approximately 180 permanent jobs at the complex, and approximately 1,000 more indirect local jobs that support the operation of the plant.

“As a contributor to a more diversified provincial economy, the petrochemical sector helps us achieve a more balanced tax base,” says Worthington.

The success of the Petrochemicals Diversification Program encouraged the province to launch a second round under the program with another $500 million of incentives.

With the current petrochemical plant projects underway and new facilities or upgrades to current facilities on the horizon, educational institutions have stepped up to support the industry. For example, NAIT – a post-secondary institution in Edmonton focusing on technical training and applied education – is working in partnership with industry on new chemical products, technologies, processes, and engineering methods, while improving operational efficiencies and reducing waste and carbon emissions.

“Companies are adept at finding solutions,” says Freitag. “Both Dow [Chemicals] and Nova have worked with our colleges to create better access to talent, and retention bonuses have helped keep development plans on schedule.”

Alberta’s petrochemical industry has benefitted from this collaboration between industry, post-secondary institutions and the provincial government, and Freitag says it must continue for the sector to continue to be successful.