CALGARY C Petrochemical companies have begun lining up to apply for the Alberta government’s new $500-million subsidy program meant to bring more “value-added” jobs towards the province.
Alberta Economic Development and Trade Minister Deron Bilous and Minister Marg McCuaig-Boyd announced the new program Monday, which may give companies building new petrochemical plants a total of $500 million in royalty credits.
The credits could be sold to energy firms that extract gas and oil 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 company is likely to make a final financial commitment on the propane-processing plant north of Edmonton this year and the subsidy program announced Monday could supply the project a lift because “it’s hard to compete against jurisdictions like the U.S. Gulf Coast.”
“It’s a whole new petrochemical value chain for Alberta and Canada,” Chappell said, adding the company will review who qualifies for that program, but is interested 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 would 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 is needed correct Canada’s trade imbalance for your type of plastic.
Canada currently imports 600,000 tonnes from the pellets C produced from a propane derivative called polypropylene C each year.
Bilous said the credit-for-processing program aims to create 1,000 new jobs and 3,000 temporary construction jobs, and it is a vital part 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 need to continue to add value to the Alberta economy through our ongoing and potential future operations,” the business’s vice-president for North America Kevin Henderson said within an email, adding that Methanex is reviewing the program details this week.
Applications for the program are due at the end of March, and also the province will announce which companies happen to be awarded the subsidies in April.
Asked why the petrochemical sector needs to be subsidized in Alberta when companies are already operating here and thinking about expanding, Bilous said, “it dates 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 based on subsidies, then everyone loses,” said University of Calgary assistant professor of economics Trevor Tombe.
Tombe is one kind of a number of financial analysts and economists who have been unhappy using the announcement, saying $500 million was a steep price for 1,000 direct jobs.
“If there’s a strong business case for (petrochemical plants), then there’s no need for the subsidies,” he said.
Tombe added that Alberta is facing a $6 billion deficit this season and that he thought many residents prefer to see $500 million in government revenues spent on things like schools, healthcare and homeless relief.
gmorgan@nationalpost.com
Twitter.com/geoffreymorgan
