Joint Venture Eyes $4.5 Billion Processing Plant in Alberta, Canada
According to company officials, The PDH/PP Facility will be strategically located in Alberta's Industrial Heartland, adjacent to Pembina's Redwaterfractionation complex and will consume approximately 23,000 barrels per day of local propane from RFS and other regional fractionation facilities.
The plant will transform propane into plastic pellets that can be transported by rail to container ships. PP is a high value polymer, which can be cost-effectively transported, using existing third-party infrastructure, throughout North America and to global markets. PP is fully recyclable and can be used in a wide range of finished products including automobiles, medical devices, food packaging and home electronic appliances, among others.
Ideally located in the Western Canadian Sedimentary Basin, the facility will have long-term access to an abundant supply of propane feedstock, with a structural cost advantage when compared to other North American facilities.
"Sanctioning of the PDH/PP Facility is the largest step taken to date by Pembina in executing its strategy to secure global market prices for customers' hydrocarbons produced in western Canada, and provides another exciting platform for future growth," said Mick Dilger, Pembina's President & CEO. Mr. Dilger added.
"Today's announcement is the culmination of many years of hard work with our partner to develop a project that is well positioned to capitalize on Alberta's abundant supply of propane and undertake value-added processing that benefits all of Pembina's stakeholders, the Province of Alberta and indeed all of Canada. It has been a pleasure to work with PIC and our strong partnership has helped mitigate the risks of entry into this new market segment,” he added.
"The PDH/PP Facility is ideally aligned with PIC's continued pursuit of sustainable and globally-diversified growth," said Mohammed Abdullatif Al-Farhoud, PIC's CEO. "Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta by developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government," added Mr. Al-Farhoud.
CKPC brings together two strategically aligned organizations, with complementary strengths, united in developing and operating a world-scale Alberta PDH/PP Facility, officials explained. PIC brings comprehensive PDH and PP project experience, along with diversified global petrochemical marketing expertise. Pembina will manage long-term propane supply and provide Alberta-specific operating and project execution experience, feedstock connectivity and strong producer relationships.
The market for PP continues to see favorable long-term fundamentals with global PP demand growth outpacing global economic growth. PIC, with its extensive global marketing experience and worldwide sales presence, will be fundamental to ensuring CKPC becomes a PP supplier of choice for customers, officials said.
The PDH/PP Facility is expected to be in-service in mid-2023, subject to environmental and regulatory approvals, and is expected to generate annual run-rate Adjusted EBITDA of $275 to $350 million, net to Pembina.
CKPC has been awarded $300 million of royalty credits from the Alberta government, of which CKPC has, to date, entered into agreements with Alberta hydrocarbon producers to monetize more than 80 percent over the first several years of operation of the PDH/PP Facility.
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