March 21st, 2018

Alberta puts energy diversification first in new legislature session

By Collin Gallant on March 8, 2018.

Alberta Premier Rachel Notley, shakes hands before the Speech from the Throne, in Edmonton on Thursday, March 8, 2018. THE CANADIAN PRESS/Jason Franson @CollinGallant

The provincial government is making energy diversification its top priority in the new session on the legislature as it opens today.

Energy Minister Margaret McCuaig-Boyd outlined to reporters on Thursday morning Bill 1, which proposes new supports for companies planning new or expanded petrochemical plants in the province.

That will include another round of a 2016 royalty credit program that was of particular interest to Medicine Hat-based Methanex and support for new straddle plant capacity to strip chemicals out of natural gas.

The move is meant to attract more investment for downstream oil and gas refining, a stance outlined last week in a major economic report by a government panel.

“We’re taking action by putting our goals into legislation for energy diversification,” said McCuaig-Boyd during a morning teleconference. “As the economy gets stronger, it’s time to talk about how we secure the recovery for the long-term and build an economy to last where no Albertan is left behind.”

RELATED: Prospect of more diversity grants has local officials

Bill 1, the Energy Diversification Act, seeks to boost value-added chemical manufacturing in the province, foster investment in supply, and increase pipeline capacity by increasing initial refining.

Last week, Premier Rachel Notley and McCuaig-Boyd threw their support behind recommendations the Energy Diversification Advisory Council.

It states Alberta should do more to counteract subsidies, tax breaks and enticements given to plant owners in other provinces and the United States.

It also suggests working to create regional refining hubs in Medicine Hat, Grande Prairie and in Red Deer, and boost pipeline capacity by doing more initial crude oil refining in the province.

No specifics were laid out on Thursday, but McCuaig-Boyd said those will be announced soon.

The Resource Diversification Council, an private industry association that includes some governmental actors such as trades schools, as well as companies like Methanex and Nova Pipelines, spoke in favour of the goals.

Executive director Lori Kent said her members have advanced plans to built plants totalling more than $20 billion.

If greenlit, the resulting construction and full-time operations jobs would lead to supply contracts and spin off industries in local economies.

“The revenue created is not subject to the ups and downs of raw commodities,” she said.

“But there is significant competition for projects, the international investment climate is very competitive. Companies have options where they build projects. Alberta and Canada need to compete… Bill 1 will ensure Alberta is the jurisdiction of choice.”

Already the government has announced it plans to offer a total of $1 billion in loan guarantees and grants to new refining process to partially upgrade bitumen. The heavy crude oil substance is currently diluted before its exported via pipelines, but refining would concentrate the material, leading to a gain in pipeline volumes.

On Thursday, McCuaig-Boyd also said there’s a need to built up feedstock network of chemical components such and ethane that are stripped from natural gas and are then turned into plastic, rubber and other chemicals.

A third program would help new chemical facilities defray some costs via trading royalty credits provided by the province.

Specific programs are still under development, but passing Bill 1 is needed to give the authority to the minister to create the province. There is also no potential budget at this time.

That is meant to counteract some higher costs, such as labour and construction inflation in the province, which were outlined in last week’s report.

“Alberta has more front-end cost, but once operational we compete with anyone,” said McCuaig-Boyd.

“It’s a long term vision. It won’t happen overnight but it will happen much faster under this government.”

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