Canadian gas company Pembina Pipeline and Kuwait’s Petrochemical Industries Company (PIC) are to evaluate the feasibility of building a combined propane dehydrogenation (PDH) and PP facility in Alberta. Pembina said the PP plant could consume around 35,000 bbl/d of propane to produce up to 800,000 t/y of the polymer, which would be transported as pellets to North American and international markets.

With access to the largest supply of propane in Western Canada’s Sedimentary Basin, Pembina said it was ideally suited to facilitate development of the project. The company added that the project also provides an opportunity to develop crucial new market demand for propane in Alberta. Over the past decade, about 85% of Alberta’s propane output has been exported across North America.

Once construction of Pembina’s third fractionator is complete, the company will have more than 200,000 bbl/d of fractionation capacity, and will control around 60,000 bbl/d of propane supply in the Fort Saskatchewan area, as well as additional volumes from Empress, Alberta.

Together, Pembina and PIC will undertake a detailed technical, financial and commercial study to determine if the project is economically feasible and whether the project aligns with each party’s investment criteria. The study is expected to take around six months, which will be followed by Pembina’s and PIC’s approval to proceed to front-end engineering design. A final investment decision is expected to be made by the middle of 2017.

The project is planned to be in operation by 2020, subject to regulatory, environmental and board approvals. President and CEO of Pembina, Mick Dilger, said the project builds on the company’s position as the largest supplier to Alberta’s petrochemical industry as well as being one of Canada’s leading energy infrastructure companies.

“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,” he said.

PIC’s CEO, Mohammed Abdullatif Al-Farhoud, added that Alberta represents a very attractive market to develop large-scale petrochemical infrastructure, as it is underpinned by long-term feedstock security and a supportive local government. What’s more, it complements the existing assets of several of PIC’s and related companies operating in the province.

The Alberta Department of Energy launched a program in February this year to encourage investment in new facilities within the methane or propane value chains. The program is accepting applications until Apr. 22, 2016.

The government of the oil-rich province will make incentives of up to C$ 500 million for qualifying investments using these feedstocks. It expects that the program could trigger potential capital investment of C$ 3-5 billion in new petrochemical facilities in Alberta.