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Pembina's $4.5-billion venture to revive petrochemicals industry

Multiple projects proposed in Alberta to soak up vast supply of low-cost natural gas from the Montney. Pembina Pipeline Corp.’s joint venture with Kuwait’s Petrochemical Industries Co. is estimated to cost $4.5 billion including the plants and supporting facilities.

CALGARY – GEOFFREY MORGAN – February 4, 2019 – After losing out on investment dollars to the U.S. for decades, observers say Canada’s petrochemical industry is “back in the game” after Pembina Pipeline Corp. said it is proceeding with a new propane-to-plastics facility.

Calgary-based Pembina and joint-venture partner Petrochemical Industries Co. of Kuwait (PIC) announced they would build a new facility near Edmonton that will process 23,000 barrels of propane per day into polypropylene, a plastic used to make car parts, grocery bags and plastic-based currency.

Canada’s manufacturing sector currently relies entirely on imported polypropylene and analysts believe the Pembina facility — along with a similar, under-construction $3.5-billion project by Inter Pipeline Ltd. — will help cut imports, apart from selling the product internationally.

“Today’s announcement is the culmination of many years of hard work with our partner to develop a project that is well positioned to capitalize on Alberta’s abundant supply of propane,” Pembina president and CEO Mick Dilger said in a release.

Pembina’s share of the project’s capital costs will be $2.5 billion including a 50 per cent interest in the joint venture, which will own the plants, and a 100 per cent stake in the supporting facilities. The project is expected to be in service by mid-2023.