Written By Christopher B. Yang and Vivek T.A. Warrier

This week, the Alberta government announced additional details with respect to three primary investment programs pursuant to the proposed Energy Diversification Act.

Petrochemicals Diversification Program

As part of its second round of the Petrochemicals Diversification Program, the Alberta government will invest up to $500 million in royalty credits over four years (beginning in 2020 to 2021). The program is intended to encourage the development of value-added petrochemical manufacturing in Alberta and the second round has been expanded to accommodate proposals that include processing ethane, in addition to propane and methane.

Petrochemicals Feedstock Infrastructure Program

As part of the Petrochemical Feedstock Infrastructure Program, the Alberta government will provide up to $500 million in loan guarantees and grants over three years (beginning in 2021 to 2022). The program anticipates that the facilities from the Petrochemicals Diversification Program will require feedstock and is intended to provide investment that support the development of facilities and infrastructure for such feedstock.

• The program is designed to encourage investments in facilities and infrastructure needed to capture more natural gas liquids (primarily ethane) required for petrochemical development.
• The program is expected to result in up to two feedstock infrastructure projects.
• Feedstock infrastructure projects could include straddle plants besides major natural gas pipelines, new gas processing plants or smaller projects built closer to wellheads or straddle plants.

The Petrochemical Feedstock Infrastructure Program and round two of the Petrochemicals Diversification Program are designed to complement each other, with the staggered timelines allowing the Alberta government to coordinate a streamlined process for selecting and announcing program proponents.

Partial Upgrading Program

As part of the Partial Upgrading Program, the Alberta government will provide up to $1 billion of investments over eight years (beginning in 2019 to 2020). The program is intended to provide investment towards partial upgrading to support oil sands competitiveness by reducing industry costs, increasing pipeline capacity and enabling more refineries to process Alberta bitumen products.

• Bulk of investments will be at the beginning of the eight-year time frame.
• A variety of financial tools, including loan guarantees, grants, royalty credits and equity ownership will be utilized. The foregoing is anticipated to be comprised of $800 million in loan guarantees and $200 million in grants and other fiscal tools.
• The Alberta government is anticipating $5 billion in private investment in connection with the Partial Upgrading Program.

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