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November 2020

NEW - AB: Offers new petrochemical investment funding

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The Alberta Petrochemicals Incentive Program (APIP), part of Alberta’s Recovery Plan, is aimed at attracting new petrochemical project investments and continuing to diversify the province’s economy while drawing directly on the province’s abundant reserves of natural gas. Many petrochemical projects use various NGLs, such as propane, butane and ethane as the primary feedstock, which may be of interest to CPA members.

The goal of the program is to aggressively compete with several jurisdictions across Asia, the Middle East, and those in the Gulf of Mexico, U.S., many of which also offer similar incentives for petrochemical manufacturers, to become a global destination for petrochemical investment.

The program is one of the key pillars of the Natural Gas Vision and Strategy, which outlines the province’s goal of becoming a top global producer of petrochemicals. According to Alberta’s Industrial Heartland Association, there is an opportunity to grow Alberta’s petrochemical sector by more than $30 billion by 2030, resulting in more than 90,000 direct and indirect jobs over the construction and operations of new facilities, and more than $10 billion in revenue for the Government of Alberta from corporate and personal income taxes.

To encourage additional investment in the sector, Invest Alberta and Alberta international offices will be courting petrochemical companies and investors by highlighting the many benefits of investing in Alberta’s growing petrochemical industry. Hydrogen-producing facilities will also be eligible for APIP, ensuring continued interest from investors in the province’s nascent hydrogen economy.

The APIP offers a direct financial incentive on new petrochemical or fertilizer facilities, or on expansions to existing ones. High-level details for CPA members include:

  • Once a project is up and running, companies that have successfully applied will receive grants worth 12 per cent of their eligible capital costs.
  • The grant will be issued in the final step in the process, ensuring that only projects already built and employing Albertans receive funds.
  • Prior to the grant, companies will need to show their project meets the program requirements by detailing the scope and expected cost of the project.
  • The application window for small projects (between $50 million and $150 million in capital costs) will be open for five years. Applications for larger projects will be open for 10 years.

Projects eligible for the program must have:

  • A minimum $50 million in capital investment
  • Consume natural gas, natural gas liquids or petrochemical intermediaries
  • Create new and permanent jobs in Alberta
  • Meet the federally set definition of a manufacturing and processing facility

There is no cap to the program, but the government will report on expected costs each fiscal year, based on applications received and projects approved.

Full details on the eligibility and requirements for projects are available here. Companies can also register to begin the application process.

 

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