(Adds comments by provincial minister, background on projects
CALGARY, Alberta Dec 5 The Canadian
oil-producing province of Alberta will offer C$500 million
($377.84 million) in royalty credits to Pembina Pipeline Corp
and Inter Pipeline Ltd for their petrochemical
projects, the government said on Monday, as it seeks to
diversify its ailing economy.
The provincial government said the companies were the
approved applicants of its Petrochemicals Diversification
Program, which supports construction of facilities that use
propane or methane, components of natural gas, as feedstock to
produce materials for products including plastics, detergents
Although petrochemical facilities do not pay royalties, the
credits they earn can be traded or sold to oil or natural gas
producers, who in turn can use them to reduce royalty payments
to the government.
Pembina's project is a joint venture with Kuwait's
Petrochemical Industries Company and has been approved to
receive up to C$300 million in royalty credits to build a
propylene-polypropylene facility, Minister for Economic
Development and Trade Deron Bilous told reporters in the
province's capital of Edmonton.
The project by Inter Pipeline, which would process propane
into propylene, has been approved to receive up to C$200 million
in royalty credits, he said.
"Once these two projects are up and running, they will
support more than 1,400 direct and indirect fulltime jobs,"
Bilous said, adding the facilities will be operational in 2021.
There are no plans to extend the program, according to a
Alberta is the largest source of U.S. oil imports and its
previously booming economy has been hard hit by the global crude
price slump, with companies slashing billions of dollars in
capital spending and laying off tens of thousands of workers.
This year the left-leaning provincial government unveiled a
review of energy royalties that left rates unchanged on existing
oil wells and oil sands projects, and avoided adding more cost
burdens to an industry already reeling from the lowest crude
prices in more than a decade.
($1 = 1.3233 Canadian dollars)
(Reporting by Ethan Lou in Calgary, Alberta; Editing by Alan
Crosby and Matthew Lewis)