Alberta is Desirable for Business Investment Again!
Posted 5 days ago
World-wide economic conditions and energy demand are slowly coming together to once again make Alberta a desirable target for business investment.
A series of speakers presented that message to 380 people gathered at the Heartland Industrial Association's annual stakeholder update held last week at the Northlands Exposition Centre in Edmonton.
The upshot for the Heartland is while Upgrader Alley might be on hold for a while, the prospect of adding to the petrochemical industry already in the region looks rather promising.
The main reason for the shift in potential is the emergence of large supplies of natural gas in the eastern US which have created an oversupply situation and depressed prices of the feedstock, said Neil Shelly, the Heartland Industrial Association's executive director.
"Five years ago shale gas was not a significant factor, but it has become bigger than anybody ever anticipated," he said. "Natural gas supplies in the US have grown to the point where we could see our biggest customer becoming an exporter."
That oversupply issue could become a prolonged problem for energy companies in Alberta but it likely would keep gas prices down to the point where methane and methanol extraction facilities could become viable, he suggested.
Extracting off gases from oil sands upgraders in the Fort McMurray area also holds potential as the province is expecting up to 150,000 barrels of ethane could be produced from bitumen upgraders as those projects come on stream.
He added constructing another upgrader in the region couldn't be ruled out as the rebound in energy prices has sparked new bitumen development. As that supply comes to market, the difference between heavy oil and light crude prices might be enough to support an upgrader.
"A major factor on the extraction side is that oil sands has returned with a vengeance," he said.
Shelly also thought the region's location could make it a center for rare earth minerals processing, should the potential of the territories be realised. Rare earths are commonly used in making rechargable batteries.
Jason Brisbois, chief economist at the University of Alberta's school of business, echoed Shelly's comments, adding Canada needs more international markets to sell its products. Since the advent of free trade in 1990, energy has become the nation's largest export, he added
"The faster we get a pipeline to the west coast the better off we're all going to be" he said.
Even the possibility of mass acceptance of electric cars would have some positive impacts on Alberta's economy, considering electricity is largely created by burning coal or natural gas.
The prospect of mass scale adoption of electric cars has power generators in the sun belt states "frothing at the mouth" considering running a car requires about the same energy as powering a house, he remarked.
Developing international trade is a focus of the Canadian government with the nation looking to develop ties with the European Union, India, South Africa, Turkey, the Ukraine and Morocco, said Tim Uppal, the region's MP.
He added the government is also getting the house in order to become attractive for business to invest by reducing corporate taxes, eliminating tariffs on machinery and cutting red tape.
Ian MacGregor, chairman of North West Upgrading, said energy investors don't have an option other than Alberta, saying those nations are unstable, autocratic or hostile to business.
His project, the last one still planned for Upgrader Alley, will sell its CO2 emissions to an Enhanced Oil Recovery project in southern Alberta. He added selling off other gases to other players in the regional patch is a good idea.
He said building upgraders in Alberta opened the door to a wider range of customers because upgraded product could be used anywhere, whereas exporting raw bitumen required the receiving party to have that refining capability available.
- By Rick Volman
Ivan Abelar
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