CDN NEWS | 
US NEWS 
October 23, 2018 – Maureen McCall
“We want to show the world that Canada can get these types of important projects built”
At the Downstream Engineering and Construction Canada 2018 conference yesterday , Hon. Deron Bilous, Alberta Minister of Economic Development & Trade established himself as a vocal champion for the Energy Industry while promoting the projects incentivized by the three programs within the Alberta Energy Diversification Act – projects that are intended to make sure Albertans get more value for the type of energy products we produce. .
He acknowledged the big boost that the Liquified Natural Gas business got from LNG Canada’s FID decision and stressed that large LNG Facilities are a major source of new employment in Western Canada and can lead to not only 1000s of jobs during construction but also 1000s more to operate facilities and supply the required Natural Gas. He advised Alberta is lobbying for western companies to build and service the facilities.
He stressed that although the investments are located in Kitimat BC, the Government of Alberta expects Albertans’ expertise to be accessed and that Alberta skilled workers to benefit–encouraging Shell and LNG Canada to look to Alberta’s substantial engineering and manufacturing expertise. The intent is to establish the right connections to see Albertans benefit from these LNG investments.
Bilous described the Pet Chem sector as a made in Alberta story that builds on the legacy of former premier Peter Lougheed, the person who first saw the value in our PetChem feedstock. Bilous went on to identify prices and pipelines as the two biggest issues Energy and Petchem face.
He stated: “We want to show the world that Canada can get these types of important projects built. On that point I must stress that while there is much to celebrate in the Kitimat project approval, it stands in stark contrast to the obstacles Alberta has faced to construct the Trans Mountain pipeline. Premier Notley and our government is determined to see this pipeline built, to ensure that we get world class prices for our world class energy…. The most responsibly produced energy on the planet.”
From there, Bilous detailed the implementation of the Energy Diversification Act – three programs designed to develop significant and enduring investment which include the Petrochemical Diversification Program, the Petrochemical feedstock development program and the Partial Upgrade Program.
He described how round one of the Petrochemical Diversification Program with $500 million in royalty credits has been successful in attracting investment to help Alberta compete with jurisdictions that are heavily subsidized on Gulf Coast. The intention was to leverage Petchem’s value proposition which increases the value of raw commodities 5-10 times. There are two successful project bids.
Based on the success of round one, round two of the PDP program offers another $500 million in royalty credits which can support up to three Pet Chem Facilities- $ 6 Billion in investments and 1000s of new jobs. The applications closed at the beginning of October and are currently under review.
Once these projects are up and running, they will require feedstocks, so the PetChem Feedstock Infrastructure program was created. Up to $500 million in grants and loan guarantees are allocated to encourage the construction of new extraction facilities on major pipelines (Straddle Plants) to recover NGLs like ethane and propane. These two programs have developed incredible interest in Alberta from both investors and industry. Faced with the need to identify other areas of our O&G sector can be used to add value to our resources, the third program of the Energy Diversification Act – the Partial Upgrading Program was proposed.
Up to $1 billion in grants and loan guarantees is committed to this program to encourage companies to build two to five Bitumen Upgrading Facilities. In the long term, the program may help to address the price differentials we currently experience for Bitumen. Bilous reported that the Alberta government has had success attracting interest to these programs.
There is intense global competition currently to attract Petrochemical plants because they offer stable tax revenue, stable employment and tend to be more resilient against the effects of commodity cycles. Because of this, US Gulf Coast governments continue to offer incentives to locate in their jurisdictions and if Alberta wants to remain competitive, there is a need to create a business environment favorable to long term investment for the industries that PetChem requires.
In Bilous’s words: “We view these investments as partnerships. This was a relationship again recognized by former premier Peter Lougheed who saw a direct connection between a resource owned by the people of Alberta and the ability of the Industry to add value to it. This is a relationship that we are proud to build on as it will benefit generations of Albertans.”
It’s encouraging that Bilous noted that he has heard loud and clear from Industry that government has an important role to play in levelling the playing field and attracting investment. By talking with Industry players, there is an understanding that Alberta is more competitive than the Gulf coast because we have cheaper feedstock and liquids rich natural gas, but that industry needs government to level the playing field because it is more expensive to construct a facility in Alberta than it is along the Gulf Coast.
Maureen McCall is a freelance writer and has over 14 years’ experience in the oil and gas industry from operations to land and joint ventures
Share This:
COMMENTARY: BC Energy Faces a Complicated Puzzle – Margareta Dovgal, Resource Works