Alberta and Louisiana are vying for billion-dollar projects
According to a report from Petrochemical Update, Canada is working to lure about 100 PetChem projects, valued at more than $12 billion, according to data from the Chemistry Industry Association of Canada (CIAC).
Some examples:
- NOVA Chemicals announced a $2 billion expansion in December in Sarnia Lambton.
- Inter Pipeline authorized plans for a propane dehydrogenation (PDH) and Polypropylene (PP) facility.
- Canada Kuwait Petrochemical is in the front-end engineering design phase of its proposed integrated propylene and PP facility in Sturgeon County near Edmonton.
- Methanex is looking at either Geismar, Louisiana, U.S. or Medicine Hat, Alberta, Canada as a location for its next brownfield $1.0 to $1.6 billion methanol expansion.
The Canadian petrochemical industry is growing quickly with $53 billion in shipments in 2016, a 25% increase over 2009. The country saw $39 billion worth of exports and $53 billion worth of imports in 2016, according to the CIAC, according to Petrochemical Update.
“Alberta’s advantage for petrochemical investments is that our feedstock is readily available here and costs less than other jurisdictions. Feedstock is typically the largest cost to a petrochemical facility operator,” the Honorable Margaret McCuaig-Boyd, Minister of Energy for Alberta, told Petrochemical Update.
Alberta accounts for almost 80% of the natural gas produced in Canada, making the province one the world’s largest suppliers of natural gas.
Competitive tax schemes: Canada’s shot to land projects
Aside from an educated workforce, abundant NGLs feedstock and in-place petrochemical infrastructure, Alberta is committing up to $1 billion to grow its petrochemical industry. The money will be used for loan guarantees, grants and royalty credits to spur more private investments in the sector. There will be $500 million in royalty credits for a second round of the Petrochemicals Diversification Program, spread over four years starting in 2020-21, the report said.
Another $500 million is for loan guarantees and grants for a petrochemical feedstock program starting in 2021. Inter Pipeline’s $3.5 billion propane dehydrogenation and polypropylene facility, received $200 million in funding through the first round of Alberta’s Petrochemicals Diversification Program (PDP). Canada Kuwait Petrochemical Corporation also received funding from the PDP.
U.S. Gulf Coast vs. Alberta: which jurisdictions offer the best economic incentives?
As of April 2018, Methanex is looking at either Geismar, Louisiana, U.S. or Medicine Hat, Alberta, Canada as a location for its next brownfield $1.0 to $1.6 billion methanol expansion.
The Ascension Parish School Board in Louisiana recently approved an industrial property tax exemption for Methanex in March 2018, clearing a roadblock for the company’s decision whether to build a third methanol plant at its Geismar site.
The Ascension Parish government and Ascension Parish Sheriff previously gave their approval for the tax break. The Louisiana tax breaks will be based on construction costs.
If the construction cost is $1.3 billion or higher, Methanex would receive 100% exemption from property taxes for five years. Construction costs at lower amounts, of $1 billion to $1.3 billion, would earn a 95% exemption for five years, while construction costs of less than $1 billion would earn a 90% exemption for five years.
Methanex has also been eyeing another one of its sites, in Mountain Hat, Alberta, Canada, as a possible location for its new methanol plant. The price of natural gas feedstock and export options will also play a key role in the decision-making process for Methanex.
A final investment decision is expected in early 2019, with construction beginning in mid-2019 and plant start-up slated for 2023, Methanex said, according to the report.
Petrochemical Update is hosting a conference for downstream project engineering and construction in Alberta in October.
