Published on: July 30, 2019 | www.sherwoodparknews.com
“Industrial operations in the Heartland region, which includes five municipalities in the Edmonton area, will have attracted more than $40 billion in investments and contributed approximately $2 billion in local spending between 2017 to 2020, according to a new report from accounting firm Ernst & Young LLP.
Fuelled by cheap feedstock materials such as propane, projects such as Inter Pipeline’s $3.5-billion Heartland Petrochemical Complex facility in Strathcona County, expected to be finished construction in 2021, are attracting major investments and could have a significant positive impact on the region’s economy.
The facility will convert locally sourced, low-cost propane into 525,000 tonnes per year of polypropylene, a plastic used in the manufacturing of a wide range of finished products. The Inter Pipeline project is expected to help spur major job growth, said Mark Plamondon, executive director of Alberta’s Industrial Heartland Association (AIHA).
“There’s no question that Inter Pipeline is having a tremendous effect on the economic activity in the region. They have really focused on getting their fabrication activities done in Alberta. So a lot of capital expenditure is happening in the province, and has a huge impact on the local economy — especially when there’s not much else going on,” said Plamondon.
Investments in the Heartland region support 31,570 full-time equivalent jobs and produce $5.2 billion in gross domestic product and output nationally, according to the new report.
“It flows through the whole economy. For every direct job in the petrochemical phase there are five indirect jobs in the economy,” said Plamondon.
Meanwhile, the Canada Kuwait Petrochemical Corp. (CKPC), a joint venture of Pembina Pipeline Corp. and the Petrochemical Industries Company of Kuwait, announced final investment plans in February, 2019 for a $4.5 billion facility in Sturgeon County. That complex will produce 550,000 tonnes of value-added plastic products from propane per year. Both the Inter Pipeline and CKPC projects benefited from provincial royalty credits worth $200 million and $300 million, respectively.
Often considered an extension of the oil and gas industry, the petrochemical industry is also “counter-cyclical,” said Plamondon. While upstream oil and gas producers are feeling the pain of low oil prices, byproducts of natural gas processing and petroleum refining such as propane are cheap feedstock for the petrochemical sector.
These investments are long-term, since “these plants can run for decades,” said Plamondon, who added that recent large investments are tied to a belief that the cheap cost of feedstock will continue.
And even though it’s often overlooked in terms of its influence on the economy, a strong petrochemical sector is important for the region. If there was a booming upstream oil and gas industry, other related industries in the region would have a lot more competition for labourers, said Plamondon.
The Heartland region also has the potential to attract more than $30 billion in additional capital investments by 2030, according to the report, which notes that between $8 billion and $12 billion could be in ethylene and polyethylene facilities alone.