Usually, Context features the upstream side of the oil and natural gas industry – that is, exploration and production. In this article, we look at the downstream side of the industry including refining, petrochemicals and processing, which is a vital link in the overall industry and Canada’s economy.
Mark Plamondon is executive director of Alberta’s Industrial Heartland Association (AIHA). He’s a seasoned business executive with over 22 years of experience and expertise regarding the management, operation, and financial analysis of mineral processing operations. Since 2017 he has led AIHA’s business development strategy to build and enhance relationships with investors, governments, and other stakeholders across the globe.
About Alberta’s Industrial Heartland Association
Alberta’s industrial heartland is an area of more than 580 square kilometres located immediately northeast of Edmonton, Alberta. It’s Canada’s largest hydrocarbon processing region that includes upgrading, refining, petrochemical production and processing, plus specialty metals extraction and fertilizer manufacture.
Plamondon says, “The association is unique in that we don’t represent individual companies. Instead, our members are five municipalities: the cities of Edmonton and Fort Saskatchewan, and Strathcona, Sturgeon and Lamont counties – in addition to three associate members, the nearby communities of Bruderheim, Redwater and Gibbons.”
The association markets the Industrial Heartland region internationally, to make companies aware of the many economic and infrastructure advantages. Promoting the region is good for local economic development but also has a wide ripple effect throughout Alberta and Canada. Once a company decides to build and operate a facility in the area, the AIHA assists with site selection, liaison with service providers such as construction and manufacturing equipment for the new facility and facilitates connections with local and regional governments. In addition, the association helps with community engagement and liaison through open house events and other communications.
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“Basically, we understand what companies are looking for when deciding where to invest and build their next petrochemical plant. We help position the Heartland region by highlighting this area’s advantages,” says Plamondon.
Competitive advantage: direct access to Canadian oil and natural gas feedstocks
The Heartland has two major competitive advantages: economies of scale, and the availability of abundant, low-cost feedstocks, especially natural gas.
“This is a large cluster of facilities, pipelines and other infrastructure,” Plamondon notes. “The larger the cluster, the more opportunities exist that output from one facility becomes an input for another. Such synergies between operations is a competitive advantage.”
In addition, the region has access to some of the lowest-cost resources in North America and among the lowest in the world, including crude oil and natural gas plus methane, ethane, propane, butane and natural gas liquids. The region is often compared to the extensive petrochemical and refining complex in the U.S. Gulf Coast, but natural gas and its components are considerably less costly in Alberta, resulting in a competitively priced end product for companies that operate in the Heartland area.
The area also offers an experienced and highly skilled workforce, extensive rail connections for transporting and exporting products, and collaboration on shared services such as water and wastewater facilities, electricity, emergency response, and an extensive supply chain for everything from food to financial services, component manufacturing and transportation.
Opportunities on the horizon
Carbon capture, utilization and storage (CCUS) is a huge advantage in the Heartland area, which sits on geology that is favourable for underground injection and storage of carbon dioxide captured from various plants and refineries: a deep layer of solid sandstone that lies beneath saline (salt water) caverns or other types of reservoirs ideal for carbon injection and storage. This geology offers tremendous long-term potential for CCUS, up to 1,000 years of storage according to some estimates.
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Having the ability to add a CCUS component to their facility can help companies meet their emissions-reduction goals. Also, many worldwide customers for petrochemicals and refined petroleum products are seeking lower-carbon products. There are already two operating CCUS facilities in the area, Quest and the Alberta Carbon Trunk Line.
On the horizon are potential new developments such as hydrogen production, biofuels such as biodiesel, and production of metals and materials needed to make batteries for electric vehicles and long-term storage for energy generated from solar and wind developments.
Downstream oil and natural gas: a key value add
Plamondon believes this sector of the oil and natural gas industry is often overlooked. Production and processing adds value to raw materials like oil and natural gas to create products that are in demand around the world.
“Tremendous value is added to Canada’s economy from this sector, including employment and government revenues,” he says. “With Canada’s high standards for environmental performance, we are also positioned to help Canada meet overall decarbonization goals. It’s a three-way win: add value to Canada’s resources, doing so in a responsible manner, and providing lower-emissions products to meet growing world demand.”