Op-Ed: Time for Canada to take notice of Alberta’s chemistry sector

On June 2, 2017, the Edmonton Journal published an opinion piece titled: “Time for Canada to take notice of Alberta’s chemistry sector,” by CIAC president and CEO Bob Masterson. This is the op-ed reproduced in full. 

As the political environment to the south continues to be highly uncertain, some global investors may look to more stable environments to support their next major capital investments.

Alberta and the province’s chemistry sector stand to realize big gains for the people of Alberta and the economy.

Globally, the chemistry industry is a large, fast-growing industry, providing critical inputs to 96 per cent of all manufactured goods. In Alberta, the chemistry sector’s annual $16-billion production follows only the value of crude oil shipments and exceeds those of natural gas. Alberta’s chemistry sector is also echoing global sectoral growth, expanding an impressive six per cent in 2016 — at a time when provincial GDP fell by nearly four per cent.

Not only is Alberta’s chemistry sector paying dividends to the province’s economy, it is also paying dividends to Albertans by offering highly skilled employment and well-paying jobs. The sector employs nearly 8,000 Albertans and further supports 45,000 positions elsewhere in the economy. These are highly skilled positions, with the chemistry sector offering the highest industrial sector wages in the province with an average salary of nearly $100,000.

In 2016, the Alberta NDP government recognized the significant pent-up potential of the chemistry sector to diversify the economy and add value to the province’s energy resources. Acting on long-standing recommendations, at a time of deep-seated challenges to the provincial energy sector, the province introduced the Petrochemicals Diversification Program (PDP).

This highly successful initiative attracted 16 proposals valued at over $20 billion in response to the $500 million in royalty credits offered by Alberta. To date, just two of those projects – Inter Pipeline and Pembina Pipeline Corp./Petrochemical Industries Co. of Kuwait have been selected to advance to the next stage of project development.

Earlier actions, including the province’s $350-million Incremental Ethane Extraction Program have been critical in advancing other global-scale chemistry projects to completion, including a $1-billion expansion of NOVA Chemicals Joffre operations.

As demonstrated by the PDP, however, the sector has ample opportunity to make further investments and make additional contributions to the provincial economy.

With growing populations in Asia and Africa pursuing middle-class lifestyles, and with large swaths of the globe intent on more sustainable outcomes in terms of clean air, clean water, clean energy and safe, abundant and nutritious food, the chemistry growth story is poised to continue for decades to come.

Over the past five years, more than 300 global scale projects worth over $250 billion US have been initiated in the United States alone, with 70 per cent of that representing foreign direct investment. With its abundant, low-carbon natural gas and natural gas liquids feedstocks, Alberta should also be able to attract a larger share of investment in the coming years.

This growth won’t happen, however, without intentional and co-ordinated effort. Alberta’s Economic Diversification Advisory Council will soon make its recommendations on how the provincial government might take further steps to add sustained value to energy resources. It will be important for Alberta to review and act on those recommendations in a timely manner.

At the same time, the province needs to do more to increase awareness and engagement by the Government of Canada. While the feds have shown an ability to make strategic investments in support of central Canada’s important automotive sector, they have been slow to recognize the importance of Alberta’s chemistry sector and its significant growth potential. While there are immediate opportunities to attract billions more in foreign investment in the sector, it is nearly certain that none of the anticipated, nor possible future projects will advance without direct collaboration between the governments in Edmonton and Ottawa.

Alberta has long been an economic driver for Canada. It’s now time for Canada to pay more attention to the province’s chemistry potential, and build on the momentum generated by the provincial government to support further growth