Inter Pipeline Ltd. says it will proceed with construction of the largest project in its history, a $3.5-billion petrochemical facility that will benefit from financial backing of the Province of Alberta.

The Heartland Petrochemical Complex, an integrated propane dehydrogenation (PDH) and polypropylene (PP) plant, will be designed to convert approximately 22,000 bbls/d of propane into 525,000 tonnes per year of polymer grade propylene. Propane feedstock for the PDH plant will be sourced from Inter Pipeline’s Redwater Olefinic Fractionator as well as several other third party fractionators in the region.

The project will receive $200 million in royalty credits awarded through the province's Petrochemical Diversification Program in December 2016.

The program also awarded up to $300 million to Pembina Pipeline for its proposed petrochemical plant, which has yet to receive a final investment decision.

Alberta’s petrochemical industry is currently entirely ethane-based. Both the Pembina and Inter Pipeline projects are aimed creating value from western Canada’s stranded and abundant propane.

Detailed engineering for the PDH facility was awarded to Fluor Corporation in 2013 and is now approximately 85 percent complete, the company said on Monday.

Inter Pipeline has also completed early civil work at the site in preparation for facility construction activities in early 2018.

Linde Engineering was awarded the front end engineering design contract for the integrated PP facility in 2017, and work is currently approximately 70 percent complete. Construction of this component of the complex is scheduled to begin in the second half of 2018.

Inter Pipeline expects to earn an average of $400 million to $500 million per year from the Heartland Petrochemical Complex once operational in late 2021.

Image: Rendering of the Heartland Petrochemical Complex. Source: Inter Pipeline Ltd.