cgallant@medicinehatnews.com@CollinGallant
Alberta plans to widely expand financial support for the petrochemical industry in hopes of luring new plant construction here, it was announced on Thursday, but with few details yet about total cost and qualification process for billions of dollars grants.
Dale Nally, the associate minister of Natural Gas and Energy, made the announcement Thursday in Edmonton alongside industry representatives and promised a new grant program that would accept all proposals and turn Alberta into a “petrochemicals powerhouse.”
Combined with the recent reduction of corporate income tax and an abundance of low cost natural gas, the plan takes Alberta an attractive place to invest, said Nally.
“Alberta can and is ready to compete with the best of the best” when attracting new plant investment, he said, stating that the program – to be developed and launched this fall – could lure $30 billion in construction by 2030, and boost government revenue by $10 billion.
The lack of details are cause for concern, said NDP Leader Rachel Notley at her own news conference.
“It’s a pretend plan,” she said. “This minister had almost nothing to do for the last 15 months, and to bring forth an announcement like this, with so little information… Albertans would be right to lose confidence in this government to lead them towards recovery.”
The Alberta branch of the Canadian Taxpayer Federation said the program amounts to a “blank cheque” for companies, and that the government should focus on reducing taxes rather that provide direct grants.
But industry officials said that direct grants and a longer 10-year program timetable are what the industry needs.
“The Alberta Petrochemicals Incentive Program shows that the province understands how to win global-scale chemistry sector investments,” said Bob Masterson, the president of the Chemistry Association of Canada.
Nally was joined by officials from that association, the Alberta Industrial Heartland Complex, near Edmonton, and the Resource Diversification Council, which is chaired by Dave Chappell, a senior official with Interpipeline.
For years, the industry and others have argued that subsidies in other jurisdictions were leaving Alberta out in the cold for major projects.
In Medicine Hat, economic developers and elected officials hope to grow a relatively small chemical sector into a cluster that would stabilize the flagging economy.
Local methanol producer Methanex said Thursday it would need more details of the new program before providing a comment.
In the past, Methanex has been enthusiastic about previous iterations of incentive programs for the sector. It lobbied the NDP government to implement its own Petrochemical Diversification Plan, and applied to have its proposed twinning of the Medicine Hat plant. It was unsuccessful, and in 2019 moved ahead expansion at its Louisiana plant site citing a number of factors. New spending on that US$1.4-billion project is currently halted as a result of the COVID-19 pandemic.
The Alberta PDP provided $500 million initially, then another $1.1 billion in royalty credits that plant owners could swap with feedstock producers once operations began to improve margins and recuperate some capital cost.
The second, larger phase of the program is still running, said Nally, with about $1 billion in credits remaining.
The new program will provide direct cash grants, which Nally said reduces red tape for companies.
Last week Premier Jason Kenney said that he personally was involved with discussions with an unnamed source interested in the United Arab Emirates about a multi-billion petrochemical investment, but that it could take years to develop.
Nally said that once the program is developed by his office, “all” proposals that meet criteria will be funded, which he said means the government is avoiding picking winners and losers in the process.
