Value-added concept

As Alberta premier, Peter Lougheed encouraged the upgrading of hydrocarbon resources in this province — efforts that planted the seed for petrochemical plants like those at Joffre and Prentiss.

Former Alberta premier Peter Lougheed and Alberta Energy Minister Mel Knight at a ceremony for the Rimbey Gas Plant ethane extraction project.

Former Alberta premier Peter Lougheed and Alberta Energy Minister Mel Knight at a ceremony for the Rimbey Gas Plant ethane extraction project.

As Alberta premier, Peter Lougheed encouraged the upgrading of hydrocarbon resources in this province — efforts that planted the seed for petrochemical plants like those at Joffre and Prentiss.

On Thursday, Lougheed was at the Rimbey Gas Plant to celebrate the completion of an ethane extraction project there. Costing about $30 million, it will allow the Keyera Facilities Income Fund facility to extract up to 5,000 barrels of ethane per day from the natural gas it processes there — ethane that was, for the most part, previously burned as fuel gas.

Now it will be transported to Dow Chemical Canada for conversion into ethylene and ultimately for the production of petrochemical products at Fort Saskatchewan and Prentiss.

Lougheed said this is exactly the kind of result his government had in mind nearly four decades ago.

“What I like about it, and I’ve always preached this, is it’s supporting the value-added concept here in Alberta with our resources,” said Lougheed, who is chairman of Keyera’s board of directors.

Alberta Energy Minister Mel Knight, who was also on hand for the celebration, praised his party’s former leader for his role in diversifying the province’s energy sector.

“Premier Lougheed is kind of the godfather of this kind of work in the province of Alberta, because he was the one that originally understood that moving hydrocarbon molecules up the value chain was a very, very important piece of Alberta’s future.”

The province’s ongoing commitment to a value-added philosophy is reflected in an incremental ethane extraction policy adopted two years ago. Under that policy, petrochemical companies that increase their ethane consumption receive royalty credits that can be used by natural gas producers — which encourages ethane production.

Keyera president and CEO Jim Bertram said the policy was essential for his company to undertake the Rimbey Gas Plant ethane extraction project.

“I think, without this policy, we couldn’t have made the economics work.”

Dow Chemical Canada president Jack Broodo said anything that boosts ethane production in Alberta is “significant” for his company.

“The fact is that gas is in decline and we need to find a way to continue keeping this petrochemical complex competitive in the world,” he said at the Rimbey Gas Plant.

Broodo added that this is particularly important with new petrochemical production coming on stream in the Middle East and Asia, where ethane feedstocks are plentiful and relatively cheap.

Bertram said the high-volume Rimbey Gas Plant was ideally suited for this project, but Keyera might consider a similar investment elsewhere.

“It’s certainly something we’ll look at, possibly at Strachan Gas Plant out at Rocky Mountain House.”

hrichards@bprda.wpengine.com