Pembina Pipeline Corporation has announced a joint feasibility study with the Petrochemical Industries Company K.S.C. (PIC), a subsidiary of the Kuwait Petroleum Corporation, for the evaluation of a world-scale combined propane dehydrogenation (PDH) and polypropylene upgrading facility in Alberta. This Project represents an opportunity to develop crucial new market demand for propane in the Province of Alberta. Over the past decade, approximately 85% of Alberta's propane production has been exported across North America. Developing Alberta based, value-add infrastructure will increase local propane demand benefitting Alberta's oil and gas producers, as well as the Province, by increasing regional economic activity and tax base. The Project could consume approximately 35,000 bpd of propane and produce up to 800,000 metric tpa of polypropylene.
The polypropylene would be transported in a pellet form to markets across North America and internationally. Polypropylene is one of the world's most commonly used polymers, traditional uses include automobile plastics, medical supplies, home appliances, transparent containers as well as numerous other applications.
With access to the largest supply of propane in the Western Canadian Sedimentary Basin, Pembina is ideally suited to facilitate the development of this Project. Once the construction of Pembina's remaining third fractionator is complete, Pembina will have over 200,000 bpd of fractionation capacity and will control approximately 60,000 bpd of propane supply in the Fort Saskatchewan area, as well as additional supply originating from Empress, Alberta. Pembina and PIC will undertake a detailed technical, financial and commercial study to confirm if the development of the Project is economically feasible and aligns with each party's respective investment criteria. This study is expected to take approximately six months, followed by Pembina and PIC approval to proceed to Front End Engineering Design. The final investment decision is expected to be made by the middle of 2017. Subject to regulatory, environmental and Pembina's Board of Directors' approval, the Project is expected to be in service by 2020.
"This Project potentially builds on both Pembina's position as the largest supplier to Alberta's existing petrochemical industry, as well as being one of Canada's leading energy infrastructure companies," said Mick Dilger, Pembina's President and Chief Executive Officer. "Developing this Project represents another natural extension of our natural gas liquids value chain and is a logical step for additional seamless integration with our existing asset base."
"PIC is very excited to be evaluating the feasibility of the Project," said Mohammed Abdullatif Al-Farhoud, PIC's Chief Executive Officer. "Alberta represents a very attractive market to develop large-scale petrochemical infrastructure, as it is supported by long-term feedstock security, a supportive local government and complements the existing asset base of a number of PIC's and related companies operating in Alberta. Moreover, this opportunity further supports PIC's continued efforts in expanding its business portfolio globally. PIC is always in search for exceptional investment and partnership opportunities, especially in the promising regions with advantageous feedstock and market."