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    Alberta Opens Petrochemicals Incentive Program

Summary

Grants will encourage C$30bn of investment in natural gas-based petrochemical sector

by: Dale Lunan

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Alberta Opens Petrochemicals Incentive Program

Alberta has opened its previously-announced Alberta Petrochemicals Incentives Program (APIP) to applications from industry, the province said October 30.

APIP was announced in July as an initiative to generate C$30bn (US$22.5bn) worth of potential natural gas value chain investments in the province’s ethane-based petrochemical sector.

Part of the province’s Covid-19 response plan, and an integral plank in its natural gas strategy and vision announced in early October, APIP will offer grants to new petrochemical projects developed over the next 10 years, once they are up and running.

“Today we’re adding another incentive to Alberta’s already world-class opportunities for petrochemical development,” Dale Nally, Alberta’s associate minister of natural gas and electricity, said in a statement. “By launching this program, Alberta moves towards achieving the goal of becoming one of the most attractive investment opportunities for petrochemicals in the world.”

To be eligible, projects must comprise a minimum capital investment of C$50mn, consume natural gas, natural gas liquids or petrochemical intermediaries derived from natural gas, and create new and permanent jobs in Alberta.

Approved projects, once they are operational and employing Albertans, will receive grants representing a maximum 12% of eligible capital costs. Both greenfield projects and brownfield expansions and debottlenecking investments will be eligible, provided the minimum capital expenditure target is met.

Smaller projects – between C$50mn and C$150mn – will have a five-year window in which to apply for APIP grants. Larger projects will have a 10-year window.

“Low-cost, low-carbon and abundant – Alberta’s natural gas and natural gas liquids make it a global player in industrial chemicals manufacturing,” said Bob Masterson, CEO of the Chemistry Industry Association of Canada. “The Alberta government recognizes this potential and the Petrochemicals Incentive Program goes a long way to level the playing field with other jurisdictions competing for new investment.”

Over the last decade, petrochemical producers have invested about US$250bn in projects in the US; over the same period, only three projects, worth less than US$25bn, have moved forward in Alberta.

“I'm particularly excited that this program will incentivise hydrogen and fertiliser production,” Business Council of Alberta president Adam Legge said. “These are key growth and diversification opportunities for our province in a lower-carbon future.”