$1B in grants, royalty credits to get more diverse oil and gas projects moving in Alberta

The provincial government is offering $1 billion in incentives to get new oil and gas projects off the ground in Alberta.

Money in the form of grants, royalty credits and loan guarantees to incentivize new energy development

Energy Minister Margaret McCuaig-Boyd announced another $1-billion in royalty credits and loans to encourage diversification of Alberta's oil and gas sector. (CBC)

The provincial government is offering $1 billion in incentives to diversify the province's oil and gas sectors over the next four years.

The announcement on Monday comes less than a month after the government announced it will offer a similar $1-billion grant and loan program to build up to five partial oil upgraders in Alberta.

Energy Minister Margaret McCuaig-Boyd said Bill 1, if passed, will make $500 million available for a second round of the petrochemicals diversification program.

Initially launched in 2016, the program is intended to encourage companies to process petrochemicals such as methane, propane, and ethane.

"Alberta does a good job of extracting oil and gas … but we don't do a great job of finding the markets, or getting to markets," said David Chappell, senior vice-president of Inter Pipeline, whose company was a recipient of the first round of petrochemical diversification grants. "Adding value to our resources can help that an awful lot."

The company is now building a $3.5-billion plant that will turn propane into polypropylene, a product used in everything from car components to food packaging. The refined product is easy to ship by rail or by ship, he said.

Inter Pipeline was one of 16 companies in the running for the 2016 royalty credits. McCuaig-Boyd said she is "very confident" the second iteration of the program will get strong interest again.

The company will start to receive the $200 million in credits once the project begins running.

Another $500 million in the form of grants and loan guarantees is also on offer for a feedstock infrastructure program, to encourage development of facilities to capture more natural gas liquids for value-added development.

McCuaig-Boyd noted that straddle plants can extract some natural gas liquids from major natural gas pipelines. Those extracted products are then sent to other processing plants. 

The money is expected to kick in by 2020, but there is no immediate timeline for when companies can start bidding on the projects. 

"Bill 1 is going to help us realize a more dynamic and diverse energy sector here in Alberta," McCuaig-Boyd said. 

"It's going to ensure this economic recovery is built to last."

The programs come as the result of recommendations from the province's energy diversification advisory committee. The committee was appointed in 2016 with a mandate to figure out how the province can increase the value of its energy resources. ​