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JV to Construct $4.5B Petrochemical Plant in Alberta

February 4, 2019

A joint venture between Kuwaiti firm Petrochemical Industries Company K.S.C. (PIC) and Canadian company Pembina Pipeline Corporation announced plans to invest in the construction of a new, integrated polypropylene (PP) upgrading and propane dehydrogenation (PDH) plant in Alberta. 

The entity, Canada Kuwait Petrochemical Corporation (CKPC), will build the facility near Pembina’s existing Redwater fractionation complex in the West Canadian Sedimentary Basin. Taking in 23,000 barrels/day of propane feedstock from Redwater and other fractionation sites in the region, the new plant has a planned capacity of 550,000 mt/yr of PP. 

“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,” the president and chief executive officer of Pembina, Mick Dilger, said in a company press release revealing the plan.

A Class II level capital cost estimate conducted by the joint venture determined that an investment of about $4 billion will be required to build the new PP and PDH plants, as well as $500 million toward support facilities. 

Pembina intends to invest $2.5 billion into the project, according to the company. Under the terms of the deal, the Canadian company will own 100% of the support facilities and provide services through a long-term, take-or-pay basis. 

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“The PDH/PP facility is ideally aligned with PIC’s continued pursuit of sustainable and globally-diverisified growth,” Mohammed Abdullatif Al-Farhoud, the chief executive officer of the Kuwaiti firm, said in a statement. “Our investment in CKPC provides PIC an opportunity to build on our existing asset base in Alberta b developing large-scale petrochemical infrastructure with a highly strategic partner in a market with long-term feedstock security and a supportive local government.”

The companies expect the new plant and support facilities to come on line by mid-2023 following the completion of regulatory and environmental approvals.