Value-Added Hydrocarbon Sector

7232019 Value-Added Hydrocarbon Sector

httpslidepdfcomreaderfullvalue-added-hydrocarbon-sector 16

41 SECTOR983085SPECIFICINDUSTRIAL ATTRIBUTES

Energy drives Albertarsquos economy andits feedstocks drive a globally recognizedand competitive petrochemicalprocessing sector

With massive reserves of conventional and shale oil andgas as well as bitumen a highly skilled technical workforceand the pipeline road and rail capacity needed to movefeedstock and product to major North American and Asianmarkets the Greater Edmonton area is both connected

and competitive for petrochemical processing or thesupply and servicing of this key sector

Sector snapshot

Edmonton is a member municipality of Albertarsquos IndustrialHeartland home to global leaders in petroleum andpetrochemical processing and Albertarsquos largestpetrochemical processing cluster Its strategic locationbetween major resource extraction areas natural storagecapacity and ready access to a skilled and educatedworkforce have contributed to the arearsquos reputation as theprimary petrochemical and hydrocarbon processing centrefor Alberta and Canada This region is responsible for asignificant portion of the $31 billion (2012)1 earned fromAlbertarsquos chemicals and petroleum refining sectorRevenue is earned from the following subsectors2

bull $20 billion refined petroleum products

bull $11 billion chemical products including

bull 43 from synthetic resins

bull 33 from basic chemicals

bull 23 from fertilizers and other chemicalsThe sector employs nearly 14000 people in Alberta3

The Greater Edmonton area represents approximatelyone-third of Albertarsquos overall labour force and its well-established role in this sector means local availability of askilled and experienced workforce

Edmontonrsquos industry has ready access to primarypetrochemical feedstocks of petroleum hydrocarbonliquids natural gas and natural gas liquids ndash as well as otheragriculture-based feedstock important for fertilizerproduction The area is at the centre of a comprehensiverail and pipeline network that moves goods in and aroundthe region and from the region to all key North Americanmarkets and west coast ports serving Asian markets

The following summarizes the petrochemical product slateavailable and produced within the Greater Edmonton area

Power is generated by co-generation within the region orsupplied through a power provider such as EPCOR anddelivered through the regionrsquos transmission anddistribution network The transmission system serving theHeartland area is currently being expanded to include a

new overhead double circuit 500kV transmission line4

ensuring plenty of capacity for future growth

The Edmonton Energy and Technology Parkrsquospetrochemical zone is well connected to the majorhighways to move goods and services eastwest (Highway16) north to key resource areas (Highway 63) and south(Anthony Henday Drive to Highway 2) to US markets

Hydrocarbon Processing Sector

bull Agriculturalchemicals

bull Anhydrousammonia andaqua ammonia

bull Butane

bull Carbon dioxide

bull Condensatesand heavydistillates

bull Ethane

bull Ethylene

bull Granular urea

bull Heating fuels

bull Hydrogenperoxide

bull Industrial gasesand steam

bull Iso-octane

bull Molybdenumand Vanadium

bull Monoethylene

glycolbull Natural gasliquids

bull Oilseed-basedproducts

bull Petroleum coke

bull Polyethylene

bull Propane

bull Propylene

bull Resins

bull Styrenemonomer

bull Sulphur-relatedproducts

bull Syntheticcrude oil

bull Transportationfuels

1 Highlights of the Alberta Economy 2013 Government of Alberta

2 Albertarsquos International Exports by Industry ndash A 10-Year Review May 2013

3 Government of Alberta Economic Commentary Which Sector is Albertarsquos Largest Manufacturing Sector Jan 29 2013

4 Heartland Transmission Project 2013




Petrochemical sectorworkforce trainingand R amp D

Curren labour raes are generally2-6 lower han he Albera averageor a range o occupaions relaing ohis secor The ollowing illusraessample wages1

EDMONTONHOURLY

Industrial instrumenttechnician $3411

Industrial engineer $3644

Chemical engineer $4968

University of Alberta

bull Home o a dozen key cenres o

research excellence in resourceand processing-relaed fields

bull School o Business ndash NauralResources and Energy MBA

bull Faculy o Engineering ndash op 5o Norh American engineeringaculies and op 5 in chemicalengineering

bull eaures over 5500 sudensover 200 proessors and50 research chairs

bull atracs over $50 millionannually rom exernalsources or sponsoredresearch unding

bull offers specialized degreeprograms including aBachelor o Science inPeroleum Engineering

Northern Alberta Institute ofTechnology (NAIT)

bull Larges appreniceship rainingprogram in Canada wih capaciyo rain 15000 apprenicesannually in 33 rades

bull Cerificae or diploma programslinked o he perochemicalindusry include

bull Chemical EngineeringTechnology

bull Engineering Design andDrafing Technology

bull Insrumen Technician

bull Maerials andInsrumenaion EngineeringTechnology

bull Occupaional Healh andSaey

Local petrochemical supportorganizations

bull Alberarsquos Indusrial HearlandAssociaion

bull Srahcona IndusrialAssociaion

bull Norheas Capial IndusrialAssociaion

1 wwwWAGEino 2011 Albera Wage and Salary Daa



E MONTONrsquoS |INDUSTRI L | SSETS 44

Access o Alberarsquos liquid-rich shale gas reserves and heforecased long-erm atracive naural gas priceconribue o very cos-compeiive expor neback pricingand a double digi inernal rae of reurn for new plansprocessing any of hese producs

Comparing Edmononrsquos and Alberarsquos compeiive posiionwih oher producing markes plans locaed here caneffecively compee when shipping any of hese producsreams o Norh American markes ndash especiallypolypropylene whose delivered cost to the US isnearly $100MT lower than product shipped from theMiddle East

Williams Energyrsquos Edmonon-area plan expansionhighlighs growing ineres in value-added processing inhe Albera Indusrial Hearland area Their new faciliy

will be Canadarsquos firs propane dehydrogenaion (PDH)faciliy and may be able o supply enough high qualiypropylene feedsock o suppor a leas one new world-scale perochemical plan1

To suppor value-added processing wihin AlberaAlberarsquos Incremenal Ehane Exracion Program providesan incenive hrough royaly credis o encourage greaerproducion of ehane and promoe value-addedperochemical producion2

Wih easy access o agriculural or foresry-basedfeedsock new opporuniies relaing o bio-dieselehanol and plan-based pulp and plasics are emerging

Alberarsquos deregulaed energy marke offers opporuniiesfor merchan power generaion using radiional fuelsources of coal or naural gas or convering excess hea orseam from indusrial processes

Proximiy o feedsock and a significan research anddevelopmen communiy rounds ou he business case forproducing hese addiives or producs and posiions

Edmonon as he key locaion for processing

More deails are available on he compelling business casefor hese four sreams by conacing Alberarsquos IndusrialHearland Associaion

Highlights of the analysis showcase the opportunity

Propylene Integrated Ethylenepolypropylene Methanol Ammoniaurea Polyethylene and

Monoethylene Glycol

Total fixed investment $765 million $886 million $609 million $25 billion

assumptions (combined) (combined) (InegraedEhylene Complex)

Annual cash cost $1035MT $182MT $185MT LDPE - $785MTmetric ton (MT) HDPE - $703MTof output assumption MEG - $420MT

Annual global demand LDPE ndash 27growth to 2025 5 8 2 HDPE ndash 4 ndash 45

MEG ndash 1 ndash 15

Primary growth markets forEdmonton-based plants US Mexico Canada US Canada US Norh America

Price-competitive markets Souh America China Souh America Souh Americafor Edmonton-basedplants China Indian Indian China

Subconinen Subconinen

Source Business Case for Mehanol Propylenepolypropylene AmmoniaUrea Polyehylene and Monoehylene Glycol IHS Global Inc Alberarsquos Indusrial Hearland 2013

Noe All hree projec models assumed o sar in 2018 wih a capial cos of 10 life span of 30 years ax rae of 25 and operaing coss as noed

1 E dmono n J ournal J ul y 20 20 12

2 Incremenal Ehane Exracion Program Repor o he

Legislaure Oc 24 2011



Duvernay11 BILLIONBARRELS

NGL

EDMONTON

Montney29 BILLIONBARRELS

NGL

Muskwa15 BILLION

BARRELSNGL


Conventional natural gasand shale gas processing

Alberarsquos convenional and shalereserves offer producers boh gassales and value-added processingpoenial Alberarsquos shale reservesare unique in ha hey have a higher-han-average percenage of nauralgas liquids ndash key o processingderivaives

Albertarsquos Shale Gas Play

Invesmen in Alberarsquos emergingshale gas play is becoming moreatracion because of

bull improved exracionechnologies reducingproducion challenges

bull access o a srong domesicmarke wih growh poenial inargeed producs

bull compeiive expor pricepoenial for he near erm

bull ready access o US and Asianmarkes hrough curren and

proposed wes coas shippingfaciliies and a Norh American-wide rail and pipeline neworkand

bull a poliical will encouraging localvalue-added processing

This emerging area of developmen iswell suied o build on he srengh ofhe curren secor capaciies

Petrochemical processingopportunities

Edmononrsquos fuure in heperochemical secor and is relaedsupply and service business is verybrigh I builds on is proximiy olow-cos energy and feedsock world-class processing infrasrucureexperise and a compeiive businessclimae Abundan low-cos nauralgas and increased biumen producionfrom he oil sands provides an exraadvanage o processing hisfeedsock ino higher value-addedproducs

An analysis was underaken for AIHA

in 2013 by IHS Global Inc o assesshe compeiive opporuniies aroundspecific producs The resulsillusrae business poenial in keysecors

The deailed analysis was based on ageneric business case for siingbuilding and operaing perochemicalplans in he Edmonon area haprocess

bull propylenepolypropylene

bull mehanolbull ammoniaurea or

bull ehylene

983227 We are pleased o add o our acreage in his play(Alberarsquos Duvernay shale gas field) as we advance ourprogram o evaluae he poenial for full-fieldcommercial developmen1

Jeff Lehrmann Presiden Chevron Canada Ld Aug 1 2013

1 Chevron Canada News Release Aug 1 2013

Source Albera Energy

Resource Conservaion Board

Albera Geological Survey




1 A lb er a rsquos Indus ri al He ar l and

2 w wwno r hw esupg ra di ng com

3 TransCanada News Release Energy Eas Pipeline Projec Aug 1 2013

4 Keyera News Release July 30 2013

5 TransCanada News Release Aug 1 2013

Albertarsquos Industrial Heartland (AIH) is Canadarsquos largest hydrocarbon processing clusterWorld-class companies within or neighbouring AIH include 1

bull Agrium Inc

bull Air LiquideCanada Ld

bull ATCO EnergySoluions

bull Aux SableCanada Ld

bull Bunge Canada

bull ChemradeWes Ld

bull Dow ChemicalsCanada ULC

bull Dow Agro Science

bull Evonik DegussaCanada

bull Horon CBI

bull Imperial Oil

bull Keyera Energy

bull ME Global

bull Norh WesRedwaerParnership

bull Pembina Pipeline Williams EnergyCanada Ld

bull Plains MidsreamCanada

bull Praxair Canada

bull Sasol CanadaHoldings Ld

bull Shell Canada Ld

bull SherritInernaionalCorporaion

bull Smih amp Nephew(Albera) Inc

bull Sulzer Meco(Canada) Inc

bull Suncor Energy

bull Tervia Corporaion

bull Umicore Canada

bull Univarbull Wesern Asphal

bull WesernHydrogen Ld

bull Williams EnergyCanada Ld

Edmononrsquos Energy and Technology Park offers indusrial developmenopporuniies for greenfield perochemical processing indusrial manufacuringlogisics research and developmen engineering and oher businesses hasuppor supply and service he heavy indusry locaed wihin Alberarsquos IndusrialHearland and resource companies locaed in he Edmonon service area coveringcenral and Norhern Albera

Oil and bitumen-based processing

Albera coninues o develop is huge reserves ofconvenional oil and oil sands while capializing on

processing hese producs and heir by-producs GreaerEdmononrsquos well-esablished refinery and upgrader basewih indusry leaders such as Imperial Oil Suncor Energyand Shell coninue o upgrade produce and ship a range ofperoleum producs These indusries creae significansupply and service opporuniies from plan mainenanceand urnaround o demand for criical ingrediens such ashe diluen needed o effecively pipe biumen

The Norh Wes Redwaer Parnershiprsquos new refiningfaciliy will upgrade biumen ino high-demand producssuch as low carbon-sandard diesel I will also uilize

gasificaion echnology o capure pure CO2 ha will henbe sold o enhance oil recovery prior o deep safeunderground sorage2

Improving access o curren and new markes for peroleumproducs is a prioriy for boh he public and privae secorand a series of soluions are moving forward ha will lead oa srenghened botom line for years o come

TransCanadarsquos proposed gas pipeline conversion EnergyEas Pipeline will expand capaciy o ship 11 million

barrelsday of crude oil ino Easern Canadian andpoenially European markes3 This new service willexpand boh domesic and expor marke poenial

Keyera Corporaion and Kinder Morgan Energy ParnersLP have also announced he consrucion of he AlberaCrude Terminal designed o ship 40000 barrelsday byrail o any Canadian or US marke4

Diversifying he ransporaion delivery sysem andincreasing he marke diversificaion conribues oopimizing he price secured for Alberarsquos hydrocarbonproducs and conribues owards a more favourable

business environmen for fuure producion andprocessing

983227 This is an hisoric opporuniy o conneche oil resources of wesern Canada o heconsumers of easern Canada creaing jobs ax revenue and energy securiy forall Canadians for decades o come5

Russ Girling Presiden and CEO TransCanada Aug 1 2013




Edmononrsquoscompeiive posiion

According to KPMGrsquos CompetitiveAlternative 2012 report Canadacontinues to rank well offering a34 cost advantage over theUS in overall specialty chemicalmanufacturing

Edmonton mirrors this cost-competitive position with thefollowing specific advantages

bull 2 - 3 cost advantage overkey US production hubs

bull lowest property taxes of

9 comparable locationsincluding no machinery andequipment (M amp E) taxesand no provincial sales tax

bull over 60 years of experienceworking with refining andpetrochemical industries

bull an established and growingpetrochemical productioncluster ndash many major playersare here

bull proximity to low-cost naturalgas and oil sands-relatedfeedstock

bull skilled experienced andmotivated workforce withvery low work stoppage andunionization rates

bull outstanding pipeline and railconnections to multiplemarkets

bull ability to optimize utility

investments through co-generation

bull readily available industrialland either zoned ordesignated for a range ofindustrial operations and

bull a municipal and governmentenvironment that is supportiveof responsible industrialdevelopment

EDMONTON SCENARIO NEIGHBOUR 983089 NEIGHBOUR 983090 NEIGHBOUR 983091

75 M amp Ewih 25 M amp Eremoved because i isconsidered non-assessable 25 more 17 more 35 more

983227 Research illustrates that the Edmonton area cancompete with global leaders in the processing of targeted

derivatives such as propylene and polypropylene ndashwith lowest delivery costs to North American markets 2

Couple this with potential local feedstock coming onstream from Williams Energyrsquos new propanedehydrogenation (PDH) facility and you have a winningcombination for business success

1 City of Edmonton Sustainable Development 2013

2 Business Model IHS Global Inc Albertarsquos Industrial Heartland Association 2013

Annual year-o-year propery ax savings in Edmonon

srenghen your botom line

Siting industrial processing plants within the City of Edmonton offersequipment-intensive plants a significant annual tax cost advantage comparedto neighbouring jurisdictions that levy a mechanical and equipment (M amp E) tax

Using 2012 tax bylaw figures from three neighbouring municipalities thefollowing shows the percentage tax increase over an Edmonton tax base for a$5 billion project on a 100 acre site 1




Petrochemical sectorworkforce trainingand R amp D

Curren labour raes are generally2-6 lower han he Albera averageor a range o occupaions relaing ohis secor The ollowing illusraessample wages1

EDMONTONHOURLY

Industrial instrumenttechnician $3411

Industrial engineer $3644

Chemical engineer $4968

University of Alberta

bull Home o a dozen key cenres o

research excellence in resourceand processing-relaed fields

bull School o Business ndash NauralResources and Energy MBA

bull Faculy o Engineering ndash op 5o Norh American engineeringaculies and op 5 in chemicalengineering

bull eaures over 5500 sudensover 200 proessors and50 research chairs

bull atracs over $50 millionannually rom exernalsources or sponsoredresearch unding

bull offers specialized degreeprograms including aBachelor o Science inPeroleum Engineering

Northern Alberta Institute ofTechnology (NAIT)

bull Larges appreniceship rainingprogram in Canada wih capaciyo rain 15000 apprenicesannually in 33 rades

bull Cerificae or diploma programslinked o he perochemicalindusry include

bull Chemical EngineeringTechnology

bull Engineering Design andDrafing Technology

bull Insrumen Technician

bull Maerials andInsrumenaion EngineeringTechnology

bull Occupaional Healh andSaey

Local petrochemical supportorganizations

bull Alberarsquos Indusrial HearlandAssociaion

bull Srahcona IndusrialAssociaion

bull Norheas Capial IndusrialAssociaion

1 wwwWAGEino 2011 Albera Wage and Salary Daa
















Monoethylene Glycol

















NGL

EDMONTON


NGL

Muskwa15 BILLION

BARRELSNGL




















bull ehylene
















bull Agrium Inc




bull Bunge Canada

bull ChemradeWes Ld




bull Horon CBI

bull Imperial Oil

bull Keyera Energy

bull ME Global




bull Praxair Canada






bull Suncor Energy


bull Umicore Canada






























































Monoethylene Glycol

















NGL

EDMONTON


NGL

Muskwa15 BILLION

BARRELSNGL




















bull ehylene
















bull Agrium Inc




bull Bunge Canada

bull ChemradeWes Ld




bull Horon CBI

bull Imperial Oil

bull Keyera Energy

bull ME Global




bull Praxair Canada






bull Suncor Energy


bull Umicore Canada


















































NGL

EDMONTON


NGL

Muskwa15 BILLION

BARRELSNGL




















bull ehylene
















bull Agrium Inc




bull Bunge Canada

bull ChemradeWes Ld




bull Horon CBI

bull Imperial Oil

bull Keyera Energy

bull ME Global




bull Praxair Canada






bull Suncor Energy


bull Umicore Canada
























































bull Agrium Inc




bull Bunge Canada

bull ChemradeWes Ld




bull Horon CBI

bull Imperial Oil

bull Keyera Energy

bull ME Global




bull Praxair Canada






bull Suncor Energy


bull Umicore Canada












































































Documents

Value-Added Hydrocarbon Sector