It’s an important week for Albertans as the Government of Alberta unveiled its budget on March 6th.
As they did a year ago, Albertans expect the Redford government to have a strong focus on tangible solutions to opening new markets for Alberta’s energy resources. This commitment was reinforced in Monday’s Speech to the Throne and Thursday’s Budget and is a key plank in the Building Alberta Plan.
To date, government efforts as well as public attention have revolved mainly around two projects: Keystone XL and Northern Gateway pipelines.
These pipelines are undeniably vital to Alberta’s energy sector and to every Albertan’s quality of life. We depend on royalties from the sale of our energy resources for jobs, schools, hospitals and roads. Finance Minister Doug Horner is cautiously optimistic that this revenue source will grow but he is also aware global energy prices remain volatile.
In resource-rich Alberta, however, shipping our raw resources by pipeline is not the only way to generate value. The government can, and should, encourage processing more of our raw energy resources into higher value products in the province. Increased value-added energy production diversifies our economy, provides higher and stable revenue, and creates new and secure markets.
Alberta already has a well-established petrochemical industry. Its Industrial Heartland north east of Edmonton is actually the largest hydrocarbon-processing centre in the country. East of Red Deer, Joffre is home to one of the world’s largest ethane-based factories in the world. This industry is vital to the provincial economy, securing four to five times higher value for our energy resources.
Premier Peter Lougheed helped transform Alberta’s petrochemical industry in the 1970s with a number of policies to support a robust and long-term sector. Over the last 40 years more than $10 billion has been invested in Alberta’s petrochemical industry for products ranging from fuels, chemicals and lubricants to detergents, plastics and synthetic fibres.
Today we encourage the provincial government to follow in the footsteps of the party’s founder and prioritize the growth of our value-added energy production. With proactive government policy and expanded infrastructure, we can transform Alberta into a global leader in innovation, advanced engineering and manufacturing as well as environmental stewardship.
Our province has tremendous potential.
The provincial government estimates reserves of 3,400 trillion cubic feet of natural gas, 58 billion barrels of natural gas liquids, and 423 billion barrels of oil are contained in the barely explored Duvernay, a vast shale formation in central and northwest Alberta. These reserves could easily double the feedstock supply for the petrochemical industry based in the Fort Saskatchewan and Red Deer areas.
A study commissioned by Alberta’s Industrial Heartland Association in 2013 found that adding value to Alberta’s energy resources could increase the province’s gross domestic product (GDP) by $6 billion a year, add $1.8 billion a year in salaries, and increase provincial revenue by $600 million a year from corporate and personal taxes.
While we still want and need to ship our energy resources internationally, we can also create in-demand products for local, regional, and national markets that can be shipped by a variety of transportation methods. Processing more of our energy resources at home also allows Alberta to reduce its environmental footprint and showcase its environmental standards as a secure supplier of clean energy products.
As the Government of Alberta contemplates a review of policies in support of more hydrocarbon processing, international companies are poised to invest billions of dollars. Other jurisdictions are competing for this investment, and the window of opportunity is closing.
A viable solution for our energy is as close as home. The time to act is now.
Join the conversation at albertaenergyplus.ca and @AlbertaPlus.
—Wayne Woldanski, Reeve, Lamont County & Chair, Alberta’s Industrial Heartland Association