Oklahoma company Williams plans petrochemical plant near Edmonton

CALGARY – An Oklahoma-based company plans to spend up to $900 million to build a plant that converts Alberta propane into a more valuable product used to make plastics.

Williams says the proposed facility in the Industrial Heartland near Edmonton would make polymer-grade propylene and could set the stage for Alberta to manufacture and export products made from the gas to the global market.

“This is a great value-add story for Alberta and for Canada,” David Chappell, president of Williams’ Canadian division, said Monday.

Polymer-grade propylene is more than four times as valuable as the propane used to make it.

The propane dehydrogenation facility — the first in Canada to use this process, according to Williams — is expected to initially produce 500 kilotonnes a year, with the possibility of doubling output through future expansions.

The plant is expected to come into service in the second quarter of 2016, provided it receives regulatory approval, and once up and running is expected to employ about 70 people.

The propylene gas will be transported on pressurized railcars to petrochemical producers on the U.S. Gulf Coast, since there are no Alberta companies that can turn polymer-grade propylene into plastics right now.

Chappell said he expects that will change and that one day there will be a market for polymer-grade propylene within the province.

“It’s a lot of propylene and it’s enough for a world-scale derivative plant,” he said.

“We are talking to these global companies about building the propylene derivatives plants in Alberta and we do believe that somebody is going to build propylene derivatives plants here.”

Those “derivatives” could take the form of plastic pellets, which could be shipped on containers by rail to the West Coast for export.

“When you talk about market access for Alberta’s bitumen and crude oil, this is far better because this is a high-value product that once it gets to a container port in Vancouver can go anywhere in the world, and very competitively,” said Chappell.

He said the 22,000 oil-equivalent barrels of propane Williams would be processing is just as valuable as shipping 140,000 barrels per day of oilsands bitumen.

Alberta’s petrochemical industry is currently based on making higher-value products out of ethane, so Monday’s announcement means a whole new type of activity for the province.

The propane Williams will use comes from a byproduct of the oilsands upgrading process called offgas.

Williams already has a plant near Fort McMurray, Alta., to strip valuable components out of the offgas, which is a hodgepodge of different materials. The mixture of natural gas liquids and olefins is then sent by pipeline to another facility in Sturgeon County near Edmonton where the gases are further broken down.

Propane derived from the Sturgeon plant will be sent to the new one, to be built in nearby Strathcona County.

Linda Osinchuk, chair of the Alberta Industrial Heartland Association, praised Williams for its “bold steps” toward adding more value to Alberta’s natural resources.

“Not only does it increase revenues into the economy within the Industrial Heartland, but into the province overall,” she said.

Osinchuk added that there is enough rail and road infrastructure in the industrial region north of Edmonton to get products to export points on the West Coast.

Energy Minister Ken Hughes said the propylene plant is one of the more exciting projects he’s seen recently.

“This is very good news for Alberta,” he said.

“When we looked at the challenge of getting any of our products to market, one of the ways that we can get world price is by having value added to our stream of products right here in Alberta, and that’s what this does.”

Hughes said the project is proceeding on its own steam, without help from the provincial government.

“This is going ahead entirely because it’s a compelling business case from a business perspective,” he said.

“Williams made a decision to proceed based entirely upon market conditions. That’s the best of all possible worlds.”