MOSCOW (MRC) -- Alberta, home to Canada’s biggest concentration of chemical companies, hopes its new incentives program will not just attract investment to process plentiful hydrocarbons into value added plastic but also make the province a top hydrogen production region as well as a major recycling center, said Hydrocarbonprocessing.
Alberta’s associate minister of Natural Gas and Electricity, Dale Nally, said during a Reuters Events Downstream conference in November that the Alberta Petrochemical Incentive Program (APIP) targets USD30 billion in investments in new petrochemical plants as well as expanded facilities.
Alberta is Canada’s largest producer of petrochemicals “but we aim to reach higher and become a top global production powerhouse,” he said. Under the program, “companies investing in new facilities or expanding existing ones can receive 12% of their eligible capital costs back as grants once the facility is up and running,” he said.
Unlike a previous program in place, this makes it “easy for companies to factor in to their return on investment calculation” while also protecting Albertan taxpayers, he added. The new incentives replace a system of credit grants under which companies had to apply and qualify. The previous program also placed a limit.
“All projects will receive funding once they are successfully built and operational,” he said. “Unlike the previous incentive program, our government will not use a petitional evaluation process,” Nally added.
“Early last month we launched our natural gas vision and strategy which comprehensively outlines our focus for the natural gas sector,” Nally said. “Given our enormous reserves of natural gas, over 200 trillion cubic feet of potential recoverable gas, it is vital for Alberta to have a plan,” he added.
Despite the hydrocarbon abundance, investment in Alberta to develop petrochemical plants has lagged far behind that which went on in the United States Gulf Coast. The Alberta Petrochemical Incentive Program is an attempt to make future projects in Alberta more competitive by offering a direct cash incentive.
Despite an impact in 2020 from lower hydrocarbon prices, Alberta must make an effort to offer that incentive. Western Canada crude oils are heavy grades that sell at a deep discount to lighter crude oil grades such as West Texas Intermediate. Markets are relatively distant which requires transportation of the heavy grades.
Western Canada has also seen a progress slowdown in projects to process and ship LNG to Asia with some running slower than projected and others canceled. Covid-19 impacted hydrocarbon demand both in 2020 as well as the consumption projected for coming years. This has led to decisions to postpone investment decisions.
The reduced demand and weaker economic growth has led to project deferments. In Alberta, Pembina Pipeline and Kuwait’s Petrochemical Industries Company (PIC) deferred one of the two biggest petrochemical companies not only in Alberta but also across Canada. The deferment occurred in March. The Final Investment Decision announcement had been made in February 2019. A decision on whether to eventually proceed or not is pending.
We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC