Alberta's government is planning a second round of incentives for petrochemical processors after an earlier program netted C$3.5 billion in new investment.
If passed, the province's Energy Diversification Act would provide more funding for processing and developing petrochemical feedstocks and include a previously announced program to partially upgrade oil sands bitumen. The incentive plan was revealed March 8 in a provincial speech from the throne that outlined the government's legislative agenda.
"We're taking bold steps to help the energy industry innovate and diversify," Minister of Energy Margaret McCuaig-Boyd said in a statement. "These measures are not one-off fixes — they're part of our made-in-Alberta plan for a more diversified and resilient economy that's built to last."
Alberta, which is Canada's largest natural gas producer, has struggled to sell the fuel and its products as shale gas from the U.S. Appalachian region has flooded traditional markets. As producers have tapped deposits locked in shales that straddle the border of Alberta and British Columbia, an abundance of NGLs has swamped local processors. In the first round of incentives, valued at C$500 million, the government approved two proposed plants. Inter Pipeline Ltd. has decided to go ahead with a C$3.5 billion project, and a venture led by Pembina Pipeline Corp. is working on front-end engineering and design for another plant.
The speech, drafted by the government and delivered by the lieutenant governor at the opening of the legislative session, did not reveal how much money the government would invest in the programs. The government said it received nearly double the number of applications it expected in the first round and those applications would have represented C$20 billion in potential investment. The government of Premier Rachel Notley holds a majority of the seats in the Alberta Legislature, which means the proposals are likely to become law.
"New petrochemical and hydrocarbon investments in Alberta will result in a stable source of revenue for the province, create long-term, high-paying jobs and support many small-to-medium businesses," Lori Kent, executive director of the Resource Diversification Council, said in the government statement.
The province said Feb. 26 that it would offer support of up to C$1 billion for partial upgrading of bitumen over eight years beginning in the 2019-2020 fiscal year. It cited a study by the University of Calgary that estimated the impact of partial upgrading could be worth as much as C$22 billion in GDP growth for Alberta over 20 years.
Partial upgrading, which reduces the thickness of tar-like oil sands bitumen so it can flow through pipelines more easily, has the potential to mitigate the need for pipeline expansions. Bitumen is now blended with condensate, ultra-light oil that is produced with natural gas, and other chemicals for shipping. Eliminating these blending agents could make as much as 30% of pipeline capacity available for other crude shipments.
