Canada's West Coast Olefins continues to develop project, sees big opportunity in Asia - CEO

Author: Stefan Baumgarten

2021/01/08

TORONTO (ICIS)--Canada’s West Coast Olefins (WCO) will continue to seek regulatory permits and clearances for its petrochemicals project in British Columbia province, CEO Ken James told ICIS in an interview.

The project's rationale remains sound, and it has strong support from residents at its planned location in Prince George - despite reports of resistance from local indigenous peoples and environmental groups, he said.

The proposed project would produce 1m tonnes/year of polymer-grade ethylene and have a lifespan of 25 years.

It would include associated natural gas liquids (NGL) recovery, extraction and separations plants, as well as downstream polyethylene (PE) production, and potentially a monoethylene glycol (MEG) plant, both to be built by third parties.

With regard to objections from indigenous peoples, known as “First Nations”, and environmental groups, James said that some local media coverage was not reflecting the situation fairly.

“I am limited in what I can say at this point,” he said.

“There is nothing to be gained by entering into a war of words via the media at this point,” he said, adding: “There is a regulatory process, and it is not the media.”

RATIONALE
The rationale for WCO’s project is straightforward, James said, involving:

- the construction of a state-of-the-art plant, with technological and environmental advantages over existing plants,
- that will convert British Columbia’s low-cost natural gas and liquids to higher-value chemical and plastic products,
- and export them to Asia, not the US.

Canada needed to develop strong local, value-added manufacturing, rather than continuing to export its natural resources or hardly processed materials, and it needed to pivot toward Asia’s growth markets, away from the US, he said.

“It’s time for Canadians to wake up, let’s create jobs in Canada” and a manufacturing sector that supplies finished products to new markets, he said.

The ongoing coronavirus health crisis underlined this point, as Canada suddenly found itself unable to produce the needed vaccines or sufficient volumes of protective face masks – “even though the materials going into all those things come from Canada”, he said.

The growth market for Canada’s petrochemicals industry is Asia, especially China, which continues to register strong economic growth, despite the pandemic, he said.

“The market in Asia is 10 times the US market,” James said.

Traditionally, the US is the biggest buyer of Canada’s chemicals and other industrial production.

In chemicals, the US market is critical: about 80% of Canada’s chemical production is exported, and about 80% of those exports go to the US, according to trade group Chemistry Industry Association of Canada (CIAC).

However, James said that the US, with its own oil, gas and petrochemicals production, was no longer a long-term market for Canada.

The WCO project - with a new, better-performing plant - recognises Asia's importance as the growth market for Canada's exports, he said.

Canada would need to eventually shut down its old chemical plants and refineries, along with an infrastructure that is designed to supply the US, James said.

As such, building the WCO project at an one of Alberta's existing petrochemicals sites would not make sense – because the infrastructure there goes south and southeast to the US, he said.

The very fact that British Columbia does not have existing petrochemicals production was an advantage as it provided an opportunity to design a new, best-in-class industry, he added.

REGULATORY PROCESS
WCO is focused on obtaining all the relevant permits and get the project to a final investment decision (FID), James said.

At the same time, WCO is seeking partners, most likely from Asia, to invest in the project and take it over, and then run it in cooperation with a Canadian operating partner, he said.

“If you get the project to final regulatory approval, there is tonnes of money in Asia” for building such a project, he said.

With regard to getting support from First Nations, James said that the regulatory process requires project proponents to minimise or eliminate impacts on First Nations’ lands, or, if that is not possible, to provide compensation.

Building the project at the existing BCR Industrial Park in Prince George would “remove almost all of the impacts,” he said.

WCO, for its part, aims to ensure an open and transparent project consultation process, in cooperation with First Nations - “there is nothing to be gained by doing this behind the scenes”, James said.

The actual duty to consult First Nations on such project lies with the government, not WCO, and it would be up to First Nations groups to participate in the process and to quantify any adverse impacts they fear, he said.

The company had been considering moving the project to a site about 140km north of Prince George, but it said in December that it decided to return the project to the BCR Industrial Park, as originally planned.

An FID is expected for this year, with plant start-up targeted for 2024, the company states on its website.

West Coast Olefins has no existing production. It was founded in 2018 to develop a petrochemicals project in British Columbia.

Thumbnail image shows polyethylene (PE), which is made from ethylene. Photo by Al Greenwood