Canada Kuwait Petrochemical (CKPC), a joint venture between Pembina Pipeline and Kuwait-based Petrochemical Industries (PIC), will move ahead with the construction of an integrated petrochemical facility in Alberta, Canada with an investment of C$4.5bn ($3.43bn).
Both Pembina Pipeline and PIC have taken a final investment decision to build the petrochemical facility, which is targeted to be brought into operations in mid-2023, depending on receipt of environmental and regulatory approvals.
The new petrochemical complex to come up within the Alberta Industrial Heartland in Sturgeon County will feature a propane dehydrogenation (PDH) plant and a polypropylene (PP) upgrading facility (PDH/PP Facility). It will have a capacity of 550,000 tons per annum of PP, which is regarded as a high value polymer.
The PDH/PP Facility will be built near Pembina’s Redwater fractionation complex (RFS). It will use around 23,000 barrels per day of local propane from RFS and other regional fractionation plants.
According to Pembina, the location of the petrochemical facility in the Western Canadian Sedimentary Basin allows it to gain long-term access to a rich supply of propane feedstock, thereby giving it a structural cost advantage in comparison to other North American facilities.
Pembina president and CEO Mick Dilger said: “Sanctioning of the PDH/PP Facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers’ hydrocarbons produced in western Canada, and provides another exciting platform for future growth.
“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 and undertake value-added processing that benefits all of Pembina’s stakeholders, the Province of Alberta and indeed all of Canada.”
Pembina’s share of investment in the PDH/PP Facility will be C$2.5bn ($1.9bn) as per its stake of 50% in CKPC. The joint venture will own the PDH and PP facilities and a 100% directly-owned stake in the associated facilities under an agreement between the partners, whereby Pembina will own the facilities and deliver services under a long-term, take-or-pay arrangement.
As per an agreement signed in May 2018 with Pembina, PIC holds the right to market the PP produced from the petrochemical facility.
PIC CEO Mohammed Abdullatif Al-Farhoud said: “The PDH/PP Facility is ideally aligned with PIC’s continued pursuit of sustainable and globally-diversified growth.
“Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta by developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government.”