InterviewCanada chems see oil sands merger as positive

10 June 2009 19:29  [Source: ICIS news]

By Stefan Baumgarten

TORONTO (ICIS news)--The $15bn (€11bn) merger between Canadian energy majors Suncor and Petro-Canada is a positive for the country’s chemicals industry as it should enhance feedstock opportunities from oil sands upgrading projects in Alberta province, an industry association said on Wednesday.

The merger would create a stronger company with a higher likelihood of moving down the oil sands value chain, David Podruzny, vice president of business and economics for Ottawa-based Canadian Chemical Producers Association (CCPA) told ICIS news in an interview.

“To the extent you move along into upgrading oil sands and beyond that, you are offering more and more opportunities for co-product production, of which the chemical industry can take advantage,” he said.

Canadian chemical producers have repeatedly highlighted the significance of olefins-rich off-gases from the oil sands projects in Alberta as an important source of feedstock for expansions and new chemical plants in that province.

As one key example, Podruzny pointed to US energy firm Williams, which since 2001 has been processing off-gases extracted from Suncor’s oil sands upgrader near Fort McMurray in northern Alberta, to make propylene.

The US firm recently announced a new 420km pipeline project to transport natural gas liquids (NGLs) and olefins from its extraction plant in Fort McMurray to its Redwater processing facility near Edmonton, to create additional capacity for Suncor’s liquids and for NGLs from other oil-sands producers' off-gases.

“That project represents opportunities for resource upgrading and value-added manufacturing for petrochemicals development,” Podruzny said.

In addition to supplying its own plant, Williams’ pipeline could supply ethane and ethylene off-gas mixes to other chemical producers in Alberta, including plants by Dow Chemical and NOVA Chemicals, he said.

Podruzny added that CCPA was encouraged by the policies of Alberta’s government to ensure more petrochemicals development and oil sands upgrading in the province.

While the current economic downturn had prompted delays or postponements of upgrader projects, the Alberta government was clearly signalling its policy intentions and encouraging investments in upgraders in the province, he said.

Suncor’s shareholders last week approved the merger deal with Petro-Canada.

While primarily focused on energy and the two firms’ oil sands project in Alberta, the deal also includes chemical production capacities, mainly in eastern Canada, where Petro-Canada has facilities in Montreal and Mississauga, near Toronto.

Petro-Canada’s chemical capacities include 350,000 tonne/year of benzene, 240,000 tonnes/year of toluene, 210,000 tonnes/year of xylene, 45,000 tonnes/year of propylene and 25,000 tonnes/year of orthoxylenes in Montreal, according to data from the CCPA.

Petro-Canada also has 350,000 tonnes/year of paraxylene capacity at its 51%-owned ParaChem affiliate in Montreal, and it has a specialty lubricants plant in Mississauga, Ontario.

($1 = €0.71)

For more on Petro-Canada and ParaChem facilities visit ICIS plants and projects
For more on Dow Chemical, NOVA Chemicals and other producers ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Stefan Baumgarten
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