CALGARY—Pembina Pipeline Corp. is looking to build a large-scale petrochemical processing plant in Alberta that could benefit from a new subsidy program.
The company announced that it is partnering with a subsidiary of the Kuwait Petroleum Corp. on a feasibility study.
The proposed plant would take 35,000 barrels a day of propane from Western Canada and process it into 800,000 tonnes of plastic pellets.
The pellets, in the form of polypropylene, would be sold to North American and international markets to be used in a range of products, including auto parts, medical supplies and home appliances.
Company spokesman Jason Fydirchuk said in an email that Canada currently imports all of its polypropylene, much of which is used in the manufacturing industry in Ontario and Quebec.
“Pembina’s facility would offer a made in Canada solution to supply Canada’s manufacturing sector with price-competitive polypropylene,” said Fydirchuk.
Fydirchuk said it is too early to say how much its propane facility would cost, but the company estimates it could generate more than 1,000 temporary construction positions and over 100 permanent positions.
Pembina says it will take about six months to complete the study to assess the potential of the plant, with a final investment decision likely by mid-2017. If approved, the plant could be completed by 2020.
Fydirchuk said the company plans to apply for the Petrochemicals Diversification Program the Alberta government launched in February, which offers a total of $500 million in royalty credits to encourage job creation and more value-added facilities in the province.
Alberta’s diversification program aims to get two to three methane or propane processing plants built in the province, generating 3,000 construction jobs and more than 1,000 direct and indirect jobs once construction is complete.
In an effort to reduce risk to the government, royalty credits are to be paid out over three years once the projects are complete. The idea is for the petrochemical companies to trade or sell the credits to oil and natural gas producers, which can use them to offset royalty payments to the province.
The application window for the program closes April 22.