Pembina Pipeline Corporation has delayed into next year a final investment decision on its proposed Alberta petrochemical plant.
The decision on the project, a joint venture with Canada Kuwait Petrochemical Corporation, has been delayed before. Pembina originally expected to reach the milestone in mid-2017, according to a news release issued in April 2016.
In December 2016, Pembina received up to $300 million in royalty credits from the Government of Alberta for the integrated propane dehydrogenation plant and polypropylene upgrading facility through the Petrochemicals Diversification Program.
Pembina said on Monday that it plans to spend $110 million in 2019 to advance development of the PDH/PP project, including progressing engineering to secure lump sum construction contracts.
The company has not yet secured sufficient offtake contracts to proceed, the company said.
“We had been expecting an FID on the company’s proposed PDH/PP facility but we understand that the delay in this timeline is related to contracting, as Pembina plans to have more than 50 percent of its share of volumes contracted before it moves forward,” GMP FirstEnergy analyst Ian Gillies wrote in a research note.
The company said that progress has been made, but it has not yet reached the contractual threshold required to take FID. It expects that decision to be made by early 2019.