‘Astounding’ – Dow plans major petrochemical expansion, net zero shift in Alberta


Dow intends to upgrade the complex from natural gas to plastic to make it the world’s first net zero-carbon petrochemical plant.


Geoffrey Morgan
Publication date:
October 6, 2021 • 

The Dow Chemical Co. office building in Midland, Michigan, in December. 9, 2015. Photo by Jeff Kowalsky / Bloomberg Files

CALGARY – Dow Chemical Co. plans to triple the size of an Alberta petrochemical plant and transition the facility to net zero emissions in a major project that experts believe will cost more than $ 10 billion, marking the largest investment of capital in the province in 15 years.

Dow announced Wednesday that it planned to build a 1.8 million tonnes per year ethane cracker at its existing Fort Saskatchewan petrochemical complex near Edmonton and also triple the facility’s ethylene and polyethylene production.

At the same time, the Midland, Michigan-based company intends to upgrade the complex from natural gas to plastic to become the world’s first net-zero-carbon petrochemical plant by capturing the facility’s gases and pumping them to an existing plant. carbon pipeline.

“This investment builds on Dow’s strong leadership position and enables us to meet the growing needs of customers and brand owners seeking to reduce the carbon footprint of their products,” said Dow President and CEO Jim Fitterling. , it’s a statement.

The company’s board of directors has yet to formally approve the project and Dow did not provide a cost estimate for the project. But experts believe it is expected to cost between $ 6 billion and $ 10 billion, given the prices associated with similar projects in other jurisdictions.

“They haven’t given a dollar figure, but it’s not going to build a polyethylene ethane cracking plant for less than $ 6 billion, I don’t think, and I would expect it to be significantly more,” he said. Bob Masterson, CEO of the Chemical Industry Association of Canada, which represents petrochemical companies.

“If we look at a similar facility, the Shell facility in Pennsylvania, we are seeing a $ 10 billion investment for ethylene cracker and polyethylene production,” he said, adding that Dow’s announcement is “absolutely amazing news. and positive. “for Alberta

Masterson said the last ethane cracker built in Canada was completed 20 years ago, when Dow and Nova Chemicals Corp. teamed up to build one at a plant in Joffre, Alta.

Alberta officials did not disclose any details about Dow’s expected investment, but said it represents the largest capital investment in the province in 15 years, meaning it would likely dwarf the $ 5 billion cost of the $ 5 of Inter Pipeline Ltd. 1 billion from Heartland’s propane-to-plastic petrochemical complex.

“Today’s announcement from Dow is fantastic news for Alberta’s economy. If this project moves forward, it could represent one of the largest job-creating investments in Alberta in more than a decade, ”Alberta Prime Minister Jason Kenney said in the same statement.

“In choosing Alberta to host the world’s first net zero carbon ethylene plant, Dow highlights our growing global leadership in emission reduction technology such as carbon capture utilization and storage, and Alberta is open to business”.

The UCP and the former NDP government have sought to attract additional petrochemical investment through tax incentives, including a 12 percent cut in capital costs, as part of an economic diversification effort away from investment purely in oil and gas. gas.

Alberta’s associate minister for natural gas, Dale Nally, declined to say what incentives were offered to Dow for the project, but said the province has received additional submissions for petrochemical projects.

“Our goal is to take the petrochemical industry and grow it by $ 30 billion by 2030 and this is a giant step in that direction,” Nally said of the Dow announcement.

During the Dow investor presentation, Fitterling said Alberta “is clearly a pioneer” in carbon capture and that the company chose to build the project and upgrade to net zero in the province due to the existing carbon capture infrastructure and carbon pipeline, government incentives and carbon taxes.

“In Canada, right now, carbon is priced at $ 40 per ton. It’s going to hit over $ 100 a ton in the time frame we’re talking about this investment, and there’s an existing carbon trunk line that we’ve contracted to be able to take our CO2, so you’ve got it. infrastructure in place, ”Fitterling said.

He said the company supports a “market-based pricing” for carbon in the United States that would lead to similar investments in the United States.

“It is working in Europe. It is working in Canada. We think it can work here, but we have to move a little further on the policy, “Fitterling said.

Dow plans to spend $ 1 billion a year to “decarbonize its global asset base in a gradual, site-by-site approach.”

The additional ethane cracker is also expected to increase Alberta’s natural gas demand by between 200 million cubic feet a day and 400 million cf / d, said Cameron Gingrich, managing director of Calgary-based consulting firm Incorrys.

“We are sending a lot of gas in the pipeline with a lot of ethane in the gas,” he said.