Energy Minister Margaret McCuaig-Boyd said Tuesday there has been lots of interest in the province’s new $500-million subsidy program for companies building new petrochemical plants in Alberta.
Fresh off a visit to Nova Chemicals Corp.’s Joffre site on Tuesday, the minister was in Red Deer on her first official meeting. She met with business representatives from the Red Deer and District Chamber of Commerce and also toured a few oilpatch service industries in the area.
The Petrochemicals Diversification Program announced Feb. 1 would apply to companies building new plants that would use methane or propane as raw energy resources to create value-added products such as plastics and fertilizers.
The companies would be able to trade or sell royalty credits to oil and gas producers, which in turn would be able to reduce their royalty payments to the province.
Nova Chemicals, presently undergoing a $1-billion expansion, uses ethylene as its primary feedstock to produce polyethylene, a value-added product used to make things like bottle caps, food packaging, containers and toys.
“We’ve been getting quite a bit of interest, so we’ll see what turns into applications,” McCuaig-Boyd said.
“We had identified at least eight to 10 companies that may be interested, and I know there’s companies beyond that have been contacting our department to get more information. I think we’re going to get good competition out of this project.”
The province is expecting to see two or three new plants — $3 billion to $5 billion in investment — that would create up to 3,000 construction jobs and about 1,000 full-time jobs. The royalty credit would be over a 10-year period.
Approvals are expected to come in April. Work on the new plants could start later this year.
McCuaig-Boyd said Nova Chemicals’ Joffre operations are a great example of Alberta diversification.
“It’s a pretty optimistic story out there. They certainly put a lot back into the economy locally here, and really, in Alberta and Canada.”
She said she is quite interested in the petrochemicals industry, any kind of business that doesn’t experience the ups and downs like other sectors.
The minister said what she was hearing in Red Deer is similar to all of Alberta.
“People are concerned about the price of oil. When are we going to recover?
“We all have concerns about Albertans out of work.”
McCuaig-Boyd said the government is taking actions, including the recent Alberta royalty review that left royalties unchanged given the current conditions, having “one conversation at a time” with the various parties about needed pipelines to get Alberta oil to markets, and climate change leadership.
She believes Alberta’s energy industry will be positioned well when the price of oil goes up.
“I think Alberta continues to be a good place to invest for people.”
With reports on Tuesday that Russia and Saudi Arabia oil exporters had agreed to freeze output levels contingent on others doing the same, McCuaig-Boyd said she did not have any details yet but she was “cautiously optimistic.”
A freeze could mean that the glut of oil supplies would begin to stabilize the continuing decline in oil prices.
“Maybe we can be optimistic that we’re going to get out of this sooner than not,” McCuaig-Boyd said.