Alberta is offering new incentives to jump-start investment in petrochemicals as part of efforts to diversify the provincial economy, which has been hit hard by the downturn in oil and gas prices.

The province's NDP government on Monday said it will offer up to $500-million in royalty credits over 10 years to select facilities through a competitive application process, with a goal of encouraging between $3-billion and $5-billion of new investment in chemical manufacturing.

It hopes to support construction of new plants that use natural gas by-products such as methane and propane to make materials for products such as plastics, detergents and textiles.

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The move comes after the province released results of its long-awaited review of energy royalties on Friday. Among other recommendations, the government-appointed panel said the province should find ways to accelerate expansion of the province's petrochemical industry.

The provincial economy has been hammered by the collapse in oil prices, with oil and gas producers shedding tens of thousands of jobs and shelving billions of dollars' worth of new projects.

Under the new program, royalty credits will be paid out over three years after a facility begins production. Petrochemical plants do not pay provincial royalties, but they will be able to trade or sell credits to oil and gas producers. The credits would enable producers to lower their royalty payments.

The government says it will make application information, including eligibility criteria for the program, available on Feb. 4. Alberta's chemical industry has annual sales exceeding $14-billion, the province says, but investment in the industry has lagged rival jurisdictions such as the U.S. Gulf Coast.