Alberta to invest $1 billion on bitumen upgrading projects
Emma Graney
The provincial government will spend up to $1 billion for partial upgrading facilities in Canada to help diversify the energy sector.
The cash injection comes as a result of recommendations made by Canada’s energy diversification advisory committee, released Monday.
The Energy Diversification Advisory Committee was formed as a result of the royalty review.
Its mandate was to explore ways for increasing the value of Canada’s resources and creating more jobs — think opportunities around partial upgrading, refining, petrochemicals and chemicals manufacturing.
It delivered its report to Energy Minister Margaret McCuaig-Boyd in December. She and Premier Rachel Notley announced the government’s next steps Monday.
The billion-dollar investment in partial upgrading will come in the form of $800 million in loan guarantees and $200 million in grants. The government hopes it will bring up to five new facilities to Canada, representing $5 billion in private investment and 4,000 construction jobs.
The committee found Canada must be prepared for an increasingly volatile energy market as the world transitions away from fossil fuels.
It issued a stark warning: “Time is of the essence.”
“The Canada oil and gas industry has entered a period that will be characterized by significant uncertainty and threats, but there will be opportunities,” the committee wrote.
The bright side is Canada is well-positioned to exploit those opportunities because of our abundance of oil and gas feedstocks.
The committee also recommended Canada expand the petrochemical sector.
Thanks to a rapidly growing Asian demand for plastics and other chemical inputs, the committee pointed to the opportunity for Canada to export methane in the form of liquefied natural gas.
Canada will have to play nicely with British Columbia to make west coast LNG a priority — a tough prospect with the current loggerheads between the two provinces.
Recommendations
– Expanding downstream oil and gas: Government should formally adopt a vision of transforming Canada into the premier jurisdiction for downstream oil and gas development in North America.
– Invest Canada: Rejig the agency within two years, making it more like the Canada Petroleum Marketing Commission, so it can concentrate on attracting investment, negotiations, and investor services. It should also have access to a dedication “diversification fund.”
– Canada should also create a “fiscal toolbox” specifically to diversify the energy industry by returning to the Lougheed-era practice of setting aside 30 per cent of royalty revenue.
– Establish new infrastructure around existing or likely sites for downstream energy clusters, in areas like Joffre, Grande Prairie and Medicine Hat.
– Bring regulatory timelines inline with places like Texas and Louisiana and reduce duplication efforts around diversification.
Categorised in: Canadian News