CALGARY C Petrochemical companies have begun arranging to apply for the Alberta government’s new $500-million subsidy program meant to bring more “value-added” jobs to the province.
Alberta Economic Development and Trade Minister Deron Bilous and Energy Minister Marg McCuaig-Boyd announced the new program Monday, which would give companies building new petrochemical plants as many as $500 million in royalty credits.
The credits might be sold to energy firms that extract oil and gas in the province, plus some executives the program would help them build new projects in Alberta.
Williams Energy Canada ULC president David Chappell said his clients are planning to make a final investment decision on a propane-processing plant north of Edmonton this season and the subsidy program announced Monday could provide the project a lift because “it’s difficult to compete against jurisdictions such as the U.S. Gulf Coast.”
“It’s another petrochemical value chain for Alberta and Canada,” Chappell said, adding the company will review who qualifies for the program, but has an interest for making an application.
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Tulsa, Okla.-based Williams is planning the propane-processing plant as part of a bigger $3-billion petrochemical complex near Edmonton that will turn propane into plastic pellets, accustomed to create consumer products like yogurt containers.
At the height of construction, Chappell said the complex would require 1,600 construction workers and about 1,000 workers in fabrication yards. When it’s complete, he explained the complex would create 150 permanent jobs.
He also said the complex would produce 450,000 tonnes of plastic pellets every year, and would help correct Canada’s trade imbalance for that type of plastic.
Canada currently imports 600,000 tonnes from the pellets C made from a propane derivative called polypropylene C each year.
Bilous said the credit-for-processing program aims to produce 1,000 new jobs and three,000 temporary construction jobs, and is a vital area of the NDP’s platform of creating more value-added jobs in Alberta.
The program is specially targeted at propane and methane processing facilities.
Vancouver-based Methanex Corp. has also been considering expanding its existing methane-processing plant in Medicine Hat, Alta.
“It is our desire to continue to add value to the Alberta economy through our ongoing and potential future operations,” the business’s vice-president for The united states Kevin Henderson said in an email, adding that Methanex is reviewing the program details this week.
Applications for that program are due at the end of March, and also the province will announce which companies have been awarded the subsidies in April.
Asked why the petrochemical sector needs to be subsidized in Alberta when information mill already operating here and interested in expanding, Bilous said, “it goes back to the fact that Alberta faces some challenges versus our biggest competitors in Texas and Louisiana.”
He said both Texas and Louisiana have incentive programs in position for petrochemical plants, which make investments there more appealing in accordance with Alberta.
“If everyone competes according to subsidies, then everyone loses,” said University of Calgary assistant professor of economics Trevor Tombe.
Tombe is among a handful of financial analysts and economists who have been unhappy using the announcement, saying $500 million would be a steep price for 1,000 direct jobs.
“If there is a strong business case for (petrochemical plants), then there’s no need for the subsidies,” he explained.
Tombe added that Alberta is facing a $6 billion deficit this year and he thought many residents prefer to see $500 million in government revenues allocated to things like schools, health care and homeless relief.
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