By Collin Gallant on March 9, 2018.
The provincial government is making energy diversification its top priority in the legislature as it opens for spring session.
Energy Minister Margaret McCuaig-Boyd outlined Bill 1 to reporters Thursday morning, 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.”
Bill 1, the Energy Diversification Act, seeks to boost value-added chemical manufacturing in the province, foster better supply chains and increase pipeline capacity by increasing initial refining.
Last week, Premier Rachel Notley and McCuaig-Boyd threw their support behind recommendations from 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 U.S.
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, a private industry association that includes 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 build plants totalling more than $20 billion.
If greenlighted, 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 plans to offer a total of $1 billion in loan guarantees and grants to a new refining process to partially upgrade bitumen. The heavy crude oil substance is currently diluted before being 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 build up a feedstock network of chemical components, such as ethane, which are stripped from natural gas 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 authority to the minister to create them. There is also no potential budget at this time.
That is meant to counteract 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 can 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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