OPPORTUNITIES IN ALBERTA’S INDUSTRIAL HEARTLAND
Mark Plamondon, P.Eng Executive Director Alberta’s Industrial Heartland Association
CANADIAN GLOBAL AFFAIRS INSTITUTE NOVEMBER 1, 2019
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 ALBERTA’S INDUSTRIAL HEARTLAND ASSOCIATION
Alberta’s Industrial Heartland is guided by a non profit association of municipalities dedicated to sustainable eco-industrial development.
Alberta’s Industrial Heartland Association is a collaborative 20-year partnership of five municipalities and three associate members.
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 WHAT WE DO
• Business Case • Transportation Development • Pipeline Corridors • Investor Outreach • Land Use • Investor Awareness & Hosting
Business Infrastructure & Development Planning
Communications Government & Community Relations Relations
• Provincial Advocacy • Education and Awareness • Federal Advocacy • Social Awareness • Municipal Relations • Community Engagement
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 STRATEGIC STAKEHOLDER PARTNERSHIPS
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 ALBERTA’S INDUSTRIAL HEARTLAND
582 sq.km We are Canada’s largest hydrocarbon processing centre Local Spending $1.5 billion Annually Jobs
6,000+ direct $40 billion in 25,000+ existing indirect 40+ Industrial Heartland Investment companies
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 EXISTING INDUSTRY
Midstream & Utilities Other ▪ NGL fractionation ▪ High-purity nickel & cobalt ▪ Salt cavern storage ▪ Nickel based composite powders ▪ Oil, natural gas, and NGL pipelines ▪ Cobalt powders ▪ Water and industrial gas systems ▪ Hydrogen peroxide
▪ CO2 capture and pipelines ▪ Prilled sulfur
Downstream Gas & NGL Downstream Oil ▪ Ethylene ▪ Refining ▪ Polyethylene ▪ Bitumen upgrading ▪ Polymer-grade propylene ▪ Benzene ▪ MEG/EO/EG ▪ Aromatics ▪ Iso-octane ▪ Styrene monomer ▪ Urea ▪ Ammonium sulphate ▪ Ammonia
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 KEY ATTRIBUTES OF THE INDUSTRIAL HEARTLAND ADVANTAGES CHALLENGES ✓ Proximity to vast oil/gas resources x Access to world markets ✓ Cost-advantaged feedstock x Attractive incentive packages offered in competing jurisdictions ✓ Pipeline and railway networks x Perception of high capital construction costs ✓ Existing infrastructure (roads, water, power) ✓ Skilled workforce ✓ Community support for industrial development ✓ Extensive regional collaboration ✓ Pre zoned heavy industrial lands ✓ Synergies with existing industry (clustering effect) ✓ Geology – conducive to salt cavern storage development
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 Western Canadian natural gas plays are world-scale, world- class, and competitive with other North American gas plays
Immense natural gas reserves: ▪ 1,128 Tcf of natural gas; over 200 years supply at current production ▪ 24.8 billion barrels of NGL ▪ 8.7 billion barrels of propane; over 100 years of supply at current production
Major plays include the Montney, Duvernay, Deep Basin, Liard, and Horn River ▪ Producers target condensate and light oil formations ▪ Higher NGL content delivers higher netbacks for producers Source: NEB
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 HISTORIC NATURAL GAS PRICING 6.00
5.00
4.00
3.00
2.00 USD/MMBTU
1.00
0.00
-1.00 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019
Differential AECO Henry Hub Source: GTI
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 NORTH AMERICAN NATURAL GAS PRICING
Source: ARC Energy Research Institute (June 24, 2019)
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 NATURAL GAS PRICE FORECAST 4.50 Actual Forecast
4.00
3.50
3.00
2.50
2.00 USD USD MMBTU /
1.50
1.00
0.50
0.00 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Source: GTI HH - AECO Henry Hub AECO
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 HISTORIC PROPANE PRICING
250.0 Post Cochin Reversal
200.0
150.0
100.0 US US CPG
50.0
0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-50.0
Source: GTI Differential Mont Belvieu Edmonton
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 PROPANE PRICE FORECAST
120 Actual Forecast
100
80
60 US US CPG
40
20
0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Differnetial Mont Belvieu Edmonton Source: GTI
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 ETHANE PRICING
▪ In Alberta, ethane is priced based on natural gas + extraction cost formula ▪ With only two major buyers, ethane consumers benefit from lack of demand competition
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 Chemical Opportunities
In 2018, AIHA engaged IHS Markit to update a study evaluating relative attractiveness of various chemical projects in AIH
▪ The opportunity for various chemical product production in AIH were ranked against each other based of the following Derivative Ranking Matrix:
Ranking Matrix Value Chain – 10% Feedstock – 25% Derivative Market Technology – 5% Outlook – 40% Operations – 15% Financing – 5%
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 CHEMICAL OPPORTUNITIES
C1 C1 C2 C3 C4
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 THE HORIZON OF OPPORTUNITY
There is a petrochemical investment window open right now for North America. There is the potential to attract $30 Billion in NEW Capital Investments to Alberta’s Industrial Heartland by 2030.
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 INVESTMENT POTENTIAL • Methanol • Fertilizers • Ethylene/polyethylene • PDH/Polypropylene • Speciality chemicals • Bitumen Upgrading / Refining • Bitumen Partial Upgrading
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 RECENT INDUSTRIAL HEARTLAND INVESTMENTS
STURGEON REFINERY ➢ First refinery built ➢ $9.7 Billion capital in Canada since investment 1984 ➢ 7,000 workers on ➢ World’s first site at peak refinery designed ➢ 500 Full-time with integrated permanent jobs carbon capture ➢ Partnership with ➢ Direct conversion Pembina for diesel bitumen to ultra- logistics services low sulphur diesel
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 RECENT INDUSTRIAL HEARTLAND INVESTMENTS
HEARTLAND PETROCHEMICAL COMPLEX
➢ Propane-to- ➢ $4.1 Billion capital polypropylene investment facility ➢ 13,000 direct and ➢ First of its kind in indirect jobs during Canada construction ➢ High value product ➢ 180 direct full-time in high demand permanent jobs worldwide
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 RECENT INDUSTRIAL HEARTLAND INVESTMENTS
➢ Propane dehydrogenation (PDH) facility will convert propane to propylene and then converted into polypropylene
➢ Will produce 1.2 billion pound/year polypropylene $4.5 billion Capital ➢ Polypropylene is worth 5 - 7 times more than propane
3,000 ➢ Joint venture between Pembina and Petrochemical Industries Site Jobs of Kuwait
300 FTEs ➢ Positive Final Investment Decision in February 2019
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 RECENT INDUSTRIAL HEARTLAND INVESTMENTS ➢ Positive FID mid-2018
➢ Over $500 million capital investment
➢ 240 km pipeline collecting and transporting CO2 from Industrial Heartland to central Alberta for enhanced oil recovery (EOR)
➢ Partnership between Enhance Energy and Wolf Midstream
➢ Operating at capacity, the capture and permanent storage of
CO2 from this project will result in significant reductions in emissions of greenhouse gases in Alberta – what will amount to the equivalent of removing more than 2.6 million cars from our roads.
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032 THANK YOU
Mark Plamondon, P.Eng Executive Director Alberta’s Industrial Heartland Association
www.IndustrialHeartland.com
www.IndustrialHeartland.com Suite 300, 9940 – 99 Avenue, Fort Saskatchewan, Alberta T8L 4G8 1.888.414.0032