Pembina Pipeline along with Petrochemical Industries Company K.S.C. of Kuwait, announced their joint venture company, Canada Kuwait Petrochemical Corporation, have okayed a $4.5 billion, 550,000 tonne per year integrated propane dehydrogenation plant and polypropylene upgrading facility to be located near Pembina’s Redwater fractionation complex. Company photo.
Project granted up to $300 million in Alberta royalty credits in 2016, facility scheduled to be in service by mid-2023
Pembina Pipeline along with its joint venture partner, Petrochemical Industries Company K.S.C. (PIC) of Kuwait, announced they have okayed a final investment decision to build a $4.5 billion petrochemical upgrading facility in Redwater, Alberta.
The two companies formed an equally-owned joint venture called Canada Kuwait Petrochemical Corporation, or CKPC. Should the 550,000 tonne per year integrated propane dehydrogenation (PDH) plant and polypropylene (PP) upgrading facility (PDH/PP Facility) be granted environmental and regulatory approvals, construction will begin this year and the facility should be operational by mid-2023.
Alberta Premier Rachel Notley called the project truly “Made-in-Alberta”. She added “By adding value to resources owned by all Albertans, we’re putting economic diversification first and seizing opportunities to upgrade more resources right here in this province.”
The complex will be build adjacent to Pembina’s Redwater fractionation complex and will process about 23,000 barrels per day of Alberta propane into polypropylene, a much higher-value plastic material used around the world to make products such as food packaging, auto parts and electronics.
Mick Dilger, President and Chief Executive Officer at Pembina Pipeline said “Sanctioning of the PDH/PP Facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers’ hydrocarbons produced in western Canada, and provides another exciting platform for future growth”.
Pembina Pipeline will manage long-term propane supply and provide Alberta-specific operating and project execution experience, feedstock connectivity and strong producer relationships.
Kuwait’s PIC will bring its comprehensive propane dehydrogenation (PDH) and polypropylene (PP) project experience, along with diversified global petrochemical marketing expertise which will be fundamental to ensuring CKPC becomes a polypropylene supplier of choice for customers.
Mohammed Abdullatif Al-Farhoud, PIC’s Chief Executive Officer said “Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta by developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government”.
“The facility will have long-term access to an abundant supply of propane feedstock, with a structural cost advantage when compared to other North American facilities,” wrote Pembina in a press release.
Polypropylene is a high value polymer that can be cost-effectively transported using third party infrastructure throughout North America and on to global markets. PP is fully recyclable and can be used in a wide range of finished products including automobiles, medical devices, food packaging and home electronic appliances, among others.
According to Pembina, the market for PP “continues to see favourable long-term fundamentals with global PP demand growth outpacing global economic growth”.
It is estimated construction of the PDH and PP plants will cost $4 billion and supporting facilities are expected to cost $500 million. Premier Notley says that at the peak of construction, the project is expected to employ 3,000 workers and upon completion, the facility will create over 200 full-time operations and head office jobs.
Pembina’s net investment will be $2.5 billion and “represents a 50 percent interest in CKPC, which will own the PDH and PP plants, and a 100 percent directly-owned interest in the supporting facilities under an agreement between Pembina and CKPC whereby Pembina will own the facilities and provide services under a long-term, take-or-pay arrangement”.
CKPC was approved in 2016 to receive up to $300 million in royalty credits under the first Made-in-Alberta program to encourage private investment in petrochemical upgrading.
“We want to thank the Government of Alberta for providing the incentive and vision that has helped make this investment a reality and we want to particularly thank the selection panel for their hard work and the consideration of Pembina’s application,” said Dilger.
The project will receive royalty credits after the facility has been constructed and is in operation.