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

Alberta's plastics producers are looking forward toa $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 toGregMoffatt, a senior director with the Chemistry Industry Association of Canada.

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

Moffatt, who is based in Alberta, spoke with CalgaryEyeopener 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 eitherunder 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.

Another project from that initial round is close to finding afinal 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'ssignificant 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.

We should be doing more with the resources we have here in Alberta, and the Alberta government'sdoing the right thing by stepping in and providing investmentsupports 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 thatit'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 ofplastics 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.

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 andchemically 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 thatour 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.

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With files from the Calgary Eyeopener.