A joint venture of Pembina Pipeline and Petrochemical Industries Company (PIC) of Kuwait has reached binding commercial terms for Pembina's proposed propylene/polypropylene facility in Sturgeon County.
PIC is subsidiary of Kuwait Petroleum Corporation, the country’s national oil company.
In December, Pembina received up to $300 million in royalty credits from the Government of Alberta over the operation of the proposed project.
At the same time, Inter Pipeline was also awarded up to $200 million in royalty credits for a proposed propane-to-propylene facility in nearby Strathcona County.
The government incentives were part of the province’s Petrochemicals Diversification Program.
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.
Other milestones in Pembina’s announcement on Monday included 50/50 joint venture agreements and the formation of a new entity, Canada Kuwait Petrochemical Corporation (CKPC)
CKPC will now proceed with activities for front end engineering design for the petrochemical project, which is estimated to cost $3.8 billion to $4.2 billion.
“It's encouraging to see another milestone along the way on a project that will help diversify the type of energy products we produce here in Alberta,” Margaret McCuaig-Boyd, Alberta's Minister of Energy, said in a statement.
Apparently the minister was undeterred by the downsizing of the facility’s throughput and the delay Pembina announced in its expectation for reaching a final investment decision.
Pembina originally expected to come to an FID in mid-2017, according a news release the company issued in April 2016. It also described the project as consuming approximately 35,000 bbls/d of propane and producing up to 800,000 metric tonnes per year of polypropylene.
The project is now to consume 22,000 bbls/d propane and produce “in excess of 1.2 billion pounds per year.” While 1.2 billion pounds sounds awfully big, it’s actually 544,311 metric tons, compared to the original 800,000 metric tons.
The company was unavailable for comment at the time of writing.