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Released May 19, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--News that a proposed propane dehydrogenation (PDH)/polypropylene facility in Alberta has entered the front-end engineering design (FEED) phase is the latest milestone in Alberta's drive to develop value-added products from its bounty of hydrocarbons. The facility is one of two projects to benefit from the Government of Alberta's petrochemicals diversification program.
To be located in Sturgeon County, the proposed plant by Pembina Pipeline Corporation (NYSE: PBA) (Calgary, Alberta) and Petrochemical Industries Company (PIC) of Kuwait would produce 1.2 billion pounds per year of polypropylene. Pembina said it was encouraged by a recently completed feasibility study for the project. It would consume 22,000 barrels per day of propane, to be sourced from Pembina's Redwater Fractionation Complex ("RFS"), as well as other regional facilities. The polypropylene would be sold on North American and global markets. Pembina and PIC announced this week a 50/50 joint venture agreement and the formation of Canada Kuwait Petrochemical Corporation (CKPC), which will proceed with FEED activities for the project. FEED activities, including a refined capital cost estimate and project execution plan, are expected to be completed by late 2018. Construction is currently expected to begin in mid-2019, with completion by the end of 2022. For more information, see Industrial Info's project report.
Another decisive factor in the project's development is an award of C$300 million (US$221 million) in royalty credits under Alberta's petrochemicals diversification program. Aimed at encouraging investments in the petrochemicals industry, specifically methane and propane upgrading, C$500 million (US$368 million) was earmarked for the initiative.
While petrochemical facilities do not directly benefit from royalty credits, as they do not pay royalties, the credits earned can be traded to an oil or natural gas producer. In turn, the producer could use these credits to reduce its own royalty payments to offset the cost of extracting natural gas and oil.
The incentives program drew 16 applications last year, but only two won out. In addition to the Pembina-PIC project, Inter Pipeline Limited (Calgary) was granted C$200 million (US$147 million) in royalty credits for its proposed PDH facility near Fort Saskatchewan. Inter Pipeline inherited the proposed plant as part of its acquisition of the Williams Companies Incorporated's (NYSE:WMB) (Tulsa, Oklahoma) and Williams Partners L.P.'s (NYSE:WPZ) (Tulsa) Canadian natural gas liquids midstream businesses. For more information, see Industrial Info's project report.
Inter Pipeline said last year it was also assessing the commercial viability of constructing an additional processing facility that converts propylene into polypropylene. "Subject to securing appropriate long term, fee-based sales contracts for the production, Inter Pipeline anticipates making final investment decisions on the PDH and polypropylene facilities by mid-2017," the company said in a press statement, adding: "Both plants are expected to be operational by mid-2021."
Inter Pipeline's capital expenditure program for 2017 totals C$545 million (US$400 million), including C$475 million (US$350 million) for organic growth initiatives.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
To be located in Sturgeon County, the proposed plant by Pembina Pipeline Corporation (NYSE: PBA) (Calgary, Alberta) and Petrochemical Industries Company (PIC) of Kuwait would produce 1.2 billion pounds per year of polypropylene. Pembina said it was encouraged by a recently completed feasibility study for the project. It would consume 22,000 barrels per day of propane, to be sourced from Pembina's Redwater Fractionation Complex ("RFS"), as well as other regional facilities. The polypropylene would be sold on North American and global markets. Pembina and PIC announced this week a 50/50 joint venture agreement and the formation of Canada Kuwait Petrochemical Corporation (CKPC), which will proceed with FEED activities for the project. FEED activities, including a refined capital cost estimate and project execution plan, are expected to be completed by late 2018. Construction is currently expected to begin in mid-2019, with completion by the end of 2022. For more information, see Industrial Info's project report.
Another decisive factor in the project's development is an award of C$300 million (US$221 million) in royalty credits under Alberta's petrochemicals diversification program. Aimed at encouraging investments in the petrochemicals industry, specifically methane and propane upgrading, C$500 million (US$368 million) was earmarked for the initiative.
While petrochemical facilities do not directly benefit from royalty credits, as they do not pay royalties, the credits earned can be traded to an oil or natural gas producer. In turn, the producer could use these credits to reduce its own royalty payments to offset the cost of extracting natural gas and oil.
The incentives program drew 16 applications last year, but only two won out. In addition to the Pembina-PIC project, Inter Pipeline Limited (Calgary) was granted C$200 million (US$147 million) in royalty credits for its proposed PDH facility near Fort Saskatchewan. Inter Pipeline inherited the proposed plant as part of its acquisition of the Williams Companies Incorporated's (NYSE:WMB) (Tulsa, Oklahoma) and Williams Partners L.P.'s (NYSE:WPZ) (Tulsa) Canadian natural gas liquids midstream businesses. For more information, see Industrial Info's project report.
Inter Pipeline said last year it was also assessing the commercial viability of constructing an additional processing facility that converts propylene into polypropylene. "Subject to securing appropriate long term, fee-based sales contracts for the production, Inter Pipeline anticipates making final investment decisions on the PDH and polypropylene facilities by mid-2017," the company said in a press statement, adding: "Both plants are expected to be operational by mid-2021."
Inter Pipeline's capital expenditure program for 2017 totals C$545 million (US$400 million), including C$475 million (US$350 million) for organic growth initiatives.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
