Even a short drive east from Houston toward Baytown shows how the U.S. shale boom is transforming the Gulf Coast.

Dense clusters of petrochemical plants, with their towering chemical reactors and mazes of pipes, line roads busy with semi-trucks hauling the goods needed to keep the industry running. Construction cranes promise more development to come.

Not so in Canada, where petrochemicals investments have slowed in recent years despite the country’s vast reserves of low-cost natural gas feedstock for plastics and other products. The reason is obvious: Compared to the Gulf Coast, Canada has limited port access, higher costs of building and carbon taxes in its four most populous provinces.

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But Canada is pushing to change that dynamic, vying to become more competitive with its neighbor at a time when U.S. trade policy and tariffs threaten to increase the cost of building and expanding Gulf Coast petrochemical plants.

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In June, the provincial government of Alberta offered petrochemical companies the chance to apply for a range of multi-million-dollar incentives to develop reserves of natural gas-derived chemical feedstocks — namely ethane, methane and propane — and process them into plastics and other materials. It was the latest in a series of incentive packages Alberta has offered to offset the higher costs of operating there.

A recent analysis by research firm WoodMackenzie showed the push has already created new development opportunities in Canada, pitting it against the U.S., the Middle East and China in the race to build new plants. Last year, during an Alberta’s first incentive push, companies applied for assistance with 16 projects worth $20 billion.

Outside of Alberta, other companies have boosted operations to take advantage of natural gas feedstocks from the United States. Canada’s Nova Chemicals recently expanded its plant in the Ontario city of Sarnia, near the Michigan border, to process more ethane from the Marcellus and Utica shale fields in Ohio, West Virginia, New York and Pennsylvania.

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American companies have already capitalized on the shift. Kinder Morgan recently completed its Utopia pipeline to feed ethane to Nova’s expanded plant.

Canada’s push comes as U.S. petrochemical manufacturers are calculating how newly imposed tariffs on steel will affect the cost of building and operating domestic manufacturing plants. The Trump administration in March levied a 25 percent import tax on steel on most countries and extended it earlier this month to include Mexico, Canada and the European Union. He has also threaten to pull out of the North American Free Trade Agreement, which would curtail U.S. exports to Mexico and Canada.

The American Chemistry Council, a national trade group, has come out in opposition to the tariffs, arguing they could delay upcoming petrochemicals projects after nearly a decade of Gulf Coast expansion. It anticipates that the tariff regime, which also affects aluminum, would affect more than $3.2 billion of U.S. chemicals exports.

DowDuPont CEO James Fitterling earlier this year told Bloomberg that the tariffs could prompt his company to turn to Canada — or even shale rich Argentina — when deciding where to build its next major facility. The company completed a $6 billion expansion along the Gulf Coast last year, and Fitterling said the tariffs on steel would have added $300 million to the cost of construction.

Those added costs, combined with Canada’s latest incentives, will likely give our northern neighbor a leg up in a highly competitive industry.

katherine.blunt@chron.com

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