How $2.1B for Alberta petrochemicals will keep more plastics production local

Alberta's plastics producers are looking forward to a $2.1-billion investment for petrochemical upgrading programs, announced this week by Premier Rachel Notley.

Director with Chemistry Industry Association of Canada says industry is growing but faces challenges

The plastics industry is celebrating the $2-billion investment promised for petrochemical upgrading programs. (Tony Seskus/CBC)

Alberta's plastics producers are looking forward to a $2.1-billion investment for petrochemical upgrading programs, announced this week by Premier Rachel Notley.

The petrochemical sector in Canada relies almost exclusively on natural gas and natural gas liquids as feedstock, according to Greg Moffatt, a senior director with the Chemistry Industry Association of Canada.

Elements of the natural gas end up in everything from food packaging to vehicles, building materials to adhesive foams and even windshield washer fluid. The uses are wide but the industry faces challenges, including moving product to market and preventing litter and pollution.

Moffatt, who is based in Alberta, spoke with Calgary Eyeopener host David Gray about what this new funding will mean for plastics. Here's a condensed version of that interview that has been edited for clarity and length.

Q: How big is the potential for this, in your mind, for Alberta?

A: When you take a look at what's been going on in the U.S., they've seen close to $260 billion Cdn in new projects either under consideration or construction in the natural gas petrochemical value chain, and Canada has just not kept pace.

We have a project currently under construction in Alberta from the initial petrochemicals diversification program in the propane value chain.

The Inter Pipeline petrochemical plant in Alberta will produce plastics that will be transported to manufacturers in Eastern Canada and around the world. Those manufacturers will turn the plastic into a variety of finished products. (Kyle Bakx/CBC)

Another project from that initial round is close to finding a final investment decision, and as you heard from the governments earlier this week, they've received over 20 applications worth close to $60 billion. We should without question be able to see four to six projects worth $20 billion move ahead in Alberta.

There's significant demand for petrochemicals. Demand for chemicals outpaces GDP globally every year, and so there's huge demand.

Q: Will this newly announced $2-billion investment from the Notley government help?

A: Absolutely. We have the feedstock here and, and pricing is quite favourable. When companies are looking at making investment decisions, they're comparing themselves to another branch internally in another jurisdiction.

And for us, that would be the United States. The U.S. Gulf Coast states and in the mid-continent states, Pennsylvania and what have you, investment supports are widely available, very transparent and predictable.

A new report suggests that liquefied natural gas projects in British Columbia would be a boon for Alberta's petrochemical industry. This file photo shows Inter Pipeline's petrochemical complex under construction northeast of Edmonton. (Kyle Bakx/CBC)

We should be doing more with the resources we have here in Alberta, and the Alberta government's doing the right thing by stepping in and providing investment supports in the right way to encourage investments in the value chain here in Alberta.

Q: We can go on about how you used plastic resin for wind turbines but most polyethylene is used for things like grocery bags and shampoo bottles and children's toys and those kinds of things that create a PR problem for this province that already has a PR problem with some of its products. How do you address that side of the issue?

A: Well, I don't know that it's a PR problem.

Q: Well, you're right, it's not public relations. It's a real problem.

A: It's a real problem from our association or our members' perspective, but [also the] industry broadly in North America and across the globe. Plastics and the other litter in the environment is unacceptable. By landfilling plastic waste here in Canada, we're wasting a precious resource and we need to stop doing it.

We've set ambitious targets for 100 per cent of plastics packaging to be either reusable, recyclable or recovered by 2040. In the interim, 100 per cent of plastics packaging is to be recyclable or recoverable by 2030.

So we need to do a better job as individuals in changing our attitudes about the products we're using and be a little bit more responsible in doing that.

The plastics industry says it aims to recycle or recover 100 per cent of plastic packaging by 2030. (Chris Wattie/Reuters)

From an industry perspective, we're absolutely working to make plastic packaging recyclable and recoverable.

From a government perspective, we need to put the supporting regulatory frameworks in place that allows these plastics to be recovered and chemically recycled.

So you take them back to their basic building blocks to be redeployed in other plastic applications, or, frankly, we should be recovering the plastics, the energy from those plastics. They shouldn't be going to landfills.

Q: Next door in B.C., we've got this massive new LNG plant in Kitimat under construction. How will that play into the plastics industry? What opportunity is there from that for Alberta?

A: To the same extent that we have a market access issue for crude oil in Western Canada, we really have a market access issue for natural gas, as well, in that our largest customer, the U.S., is now our largest competitor. And so natural gas is, it needs to find a home from Western Canada.

With LNG, we'll see increased demand, and hopefully we'll see a few more projects. But with more natural gas moving to market, that will in turn allow more natural gas liquids to be produced.

We should be doing more with the natural gas, the methane and the natural gas liquids, the ethane and the propane, here in Western Canada, before we move it to another market, where somebody else will add value to it if we don't.

With files from the Calgary Eyeopener.


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