The New Energy Economy Series
Written by Vivek Warrier, Shawn Munro and Ashley White
With the newly announced Alberta Petrochemicals Incentive Program (APIP), the Alberta government intends to attract $30 billion in new investments by 2030. For full details, read Alberta Introduces APIP in a Bid to Become a World-Class Leader on Petrochemical Facility Development.
Purpose: To grow the petrochemical sector by providing financial incentives through grants, driving investment in the development of new or expanded petrochemical manufacturing facilities to produce petrochemical, hydrogen, fertilizer and fuel products.
Grants: The grants will be worth 12 percent of a project's estimated total eligible capital costs of the project (i.e., manufacturing and processing capital expenditures).
Targets: There are no specific targets on the number of projects to be developed, and there is no cap to the program.
Government Reporting: The government will report on expected costs each fiscal year based on applications received and project approvals (see: October 30, 2020, Press Release).
Timing: APIP opened applications on November 1, 2020. The program will close on November 1, 2030.
APIP replaces the government’s Petrochemical Diversification Program (PDP). Projects that were approved to receive royalty credits under PDP may transfer their projects to APIP. Companies will have six months from the launch of APIP (November 1, 2020) to select the program they would like to proceed under.
Eligibility: Projects must meet the following criteria, as well as those further outlined in the Program Guidelines:
- The project must be physically located in Alberta.
- The capital investment must be at least C$50 million.
- The facility must use natural gas, natural gas liquids, or petrochemical intermediaries such as ethylene, propylene, benzene, etc. in the manufacturing of its own products. Projects using eligible feedstock to produce hydrogen are eligible.
- The project must create permanent jobs in Alberta.
Payments: Facilities with a capital investment between $50 million and $150 million must be in-service by November 1, 2025, to be able to receive grants. These projects will receive the full amount of the grant in a single payment after the facility is continuously in operation and consuming eligible feedstock for a 12-month period. Facilities with a capital investment greater than $150 million must be in-service by November 1, 2030, to be able to receive grants. These projects must be continuously operational and consuming eligible feedstock for 36 months, with the instalment of the grant payment made after each 12-month period of operation.
Bennett Jones has extensive experience with the above and many other elements of energy development and major capital projects. If you have any questions regarding petrochemical facility development in Alberta, please contact a member of Bennett Jones' Energy or Regulatory groups.