Market Snapshot: Demand for propane in Alberta could look considerably different by 2020

Release date: 2016-04-27

Alberta’s propane demand landscape might substantially change by 2020. As of 2015, the industrial sector accounted for 73 per cent of demand for propane in Alberta, while demand from the petrochemical sector was essentially zero. However, if two new projects under consideration are built and put into operation, Alberta propane demand could more than double by 2020 and the petrochemical sector could quickly grow to account for 50 per cent of demand.

Proposals from Williams and Pembina could add an additional 57 000 barrels of demand for propane within Alberta. The proposals are based on construction of propane dehydrogenation (PDH) facilities that consume propane as a feedstock and produce propylene which can then be converted to polypropylene (a type of plastic) for use in various products.

The Williams project, first announced in 2013, would consume 22 000 barrels per day of propane to produce propylene. Williams has secured an off-take agreement for the propylene and a final investment decision is expected in late 2016. Pending all necessary approvals, start-up is slated for 2019.

On 11 April 2016, Pembina announced that it was evaluating the feasibility of a PDH facility and polypropylene upgrading facility in Alberta. The project would consume approximately 35 000 barrels per day of propane. A final investment decision could be made by mid-2017 and, subject to necessary approvals, the project could be in service by 2020.

In February 2015, the Alberta government established the Petrochemical Diversification Program (PDP) to encourage diversification of the province’s petrochemical sector, which is currently based primarily on ethane.^Footnote 1 Both the Williams and the Pembina projects could potentially qualify for royalty-based incentives under the PDP.^Footnote 2

Date modified:

2023-11-28