A Forecast of the Potential Impact of the Petrochemical Industry On the Alberta Economy (July-August)
Authors: Towle W. Ray , Nixon Andrea J. 
Published: March 2010

INTRODUCTION

The imminent prospect of world-scale petrochemical establishments in Alberta has generated much speculation concerning their impact on future growth and industrialization in the province. Issues include: the number and size of plants; the level of upgrading; competition in the world marketplace; and the over-all economic impact at the regional, provincial and national levels. Announcements of petrochemical proposals followed by a host of applications for development, and then a recent hesitation to proceed brought on in part by a downturn in the world economy, have led to great uncertainty in the existing status of petrochemical expansion in Alberta. This paper attempts to consolidate, the present and prospective status of the Alberta petrochemical industry and from that forecast its role in and impact on the province.

Data and information submitted to the Energy Resources Conservation Board in the course of industrial development permit applications and subsequent Board hearings provided the background for the analysis. Current Board forecasts of feedstock availability, the provincial government's objective to facilitate petrochemical developments and the authors' perspective of petrochemical markets served to delimit the forecast petrochemical profile. This profile forms the basis of the analysis from which the potential contribution of the petrochemical industry in Alberta is measured.

It is likely that additional projects will replace or augment the industrial profile outlined here. It is also likely that the evaluation will overstate the actual impact of the petrochemical industry in Alberta if a number of projects do not proceed as scheduled. Nevertheless, the analysis presents orders of magnitude which can be associated with the existing status of the petrochemical industry and thereby assist industry and government in perceiving and coping with the possible ramifications of future petrochemical expansion.

In the wake of the projected industrial profile, self-sufficiency in petrochemicals at the provincial and national levels is seen as a natural outcome of the analysis rather than as a goal supported by specific government policies.

Overview of Current and Proposed Petrochemical Activity

Existing Establishments

In 1981, eighteen petrochemical plants were operating in Alberta and producing a range of products. First-line derivatives included ammonia, ethylene, methanol and carbon black; second-line derivatives included urea, nitric acid, ammonium phosphate and sulphate, formaldehyde, acetic acid, polyethylene, ethylene oxide and dichloride, and carbon disulphide; and third-line derivatives included nitrogenous and phosphatic fertilizers, vinyl chloride monomer (VCM), ammonium nitrate, ethylene glycol, acetic anhydride, vinyl acetate monomer (VAM) and pentaerythritol. In addition, polyvinyl chloride (PVC) represented a fourth-line petrochemical derivative. Existing petrochemical production relative to the wide range of other petrochemical derivatives is outlined in Figure 1.

(Figure in full paper)

Existing capacity of petrochemical establishments as of September 1981 is outlined in Table 1. Except for a comparatively few world-scale plants producing essentially first line derivatives such as ammonia, ethylene and methanol, most plant capacities are relatively small and were designed to serve regional rather than national or export markets. Alberta-based petrochemical plant annual capacities total some 2493 kilotonnes of first-line derivatives, 1592 kilotonnes of second-line derivatives, 2276 kilotonnes of third-line derivatives and 100 kilotonnes of fourth-line derivatives.