Alberta has passed the Energy Diversification Act, which will enable the province to invest up to $2 billion in energy diversification projects including petrochemicals, petrochemical feedstocks and bitumen partial upgrading.

The bill includes $500 million for round two of the Petrochemicals Diversification Program, $500 million for the new Petrochemicals Feedstock Infrastructure Program, and $1 billion for the new Partial Upgrading Program.

The funding will be a combination of royalty credits, loan guarantees and grants.

Alberta expects these initiatives to attract $10 billion in private investment, support 8,000 construction jobs and hundreds more operational jobs.

Industry can submit applications for the Partial Upgrading Program until Sept. 4, and can submit applications to the Petrochemicals Diversification Program and Petrochemicals Feedstock Infrastructure Program until Oct. 1. The province says that a decision on successful applicants is scheduled for late 2018.

Petrochemicals and petrochemical feedstock

The second round of the Petrochemicals Diversification Program expands focus into the use of ethane, in addition to propane and methane.

The Petrochemicals Feedstock Infrastructure Program is designed to provide the building blocks for investment including new natural gas processing facilities, smaller projects built closer to wellheads or straddle plants, and facilities that are built along major natural gas pipelines that can extract certain components during transportation.

The first round of the program in 2016 led to Inter Pipeline’s final investment decision on its $3.5-billion propane-to-polypropylene complex, which is under construction in the Industrial Heartland near Fort Saskatchewan. It is expected to start operating in late 2021. A second proposed project from Canada Kuwait Petrochemical Corporation is undergoing front-end engineering design work for its project, with a final investment decision expected by early 2019.

Bitumen partial upgrading

Partial upgrading is described as an emerging technology that reduces the thickness of oilsands bitumen so it can flow through pipelines more easily, without having to be blended with diluent. This process increases the volume of the bitumen product as well increasing its value.

Alberta’s new Partial Upgrading Program commits $1 billion to support projects to develop the technology, which the province says would enhance oilsands industry competitiveness by reducing costs, increasing pipeline capacity and enabling more refineries to process Alberta bitumen products.

“In May, industry was given an opportunity to review the draft application guidelines to ensure they were compatible with industry needs. More than 30 responses were received from companies across the three programs, foreshadowing a strong level of interest among investors,” the province said in a statement on Monday.

Image: Rendering of Inter Pipeline's Heartland Petrochemical Complex, which is currently under construction near Edmonton. Source: Inter Pipeline