Alberta will invest an additional $1 billion in its energy diversification program, the provincial government announced Monday as it looks for new opportunities for its oil and gas industry. The amount is in addition to the $1 billion announced at the end of February.
Part of the money will be spent on increasing the production of ethane, one of the main chemical compounds found in natural gas and used in plastic production. The province also wants more oil to be refined in Alberta.
The announcement follows the tabling of Bill 1 on energy diversification on Friday.
State aid will be divided into three tranches:
- $500 million in royalty credits to help petrochemical companies diversify their operations.
- $500 million in loan guarantees and subsidies to help companies that want to produce higher value-added substances, such as ethane, gain access to more raw materials.
- $1 billion in loan guarantees and subsidies to help businesses modernize their equipment.
The government hopes that these loans and grants will result in $10 billion in private investment. The province believes that these various projects will lead to the creation of 8,000 jobs during the construction of the new infrastructure.
Alberta Energy Minister Margaret McCuaig-Boyd says she wants to reduce the dependence of Alberta’s oil and gas industry on pipelines. “We are trying to encourage companies to extract products like ethane here in Alberta rather than exporting gas and crude oil directly,” she says.
Bob Masterson, president of the Chemistry Industry Association of Canada, is saddened to see a large share of petrochemical investments going to the United States rather than Canada. “For five years, we should have seen 25 to 30 international projects announced in Canada, we had only 3,” he laments.
A report from the International Energy Agency released last week predicts that more and more of the world’s oil and gas will be refined to produce plastics , lubricants or cosmetics rather than fuels.
Nicole Hicks a graduate of UFT. She’s based in Toronto but travels much of the year. Nicole has written for NPR, Motherboard, MSN Money, and the Huffington Post. Nicole is a financial reporter, focusing on technology, national security, and policing.