Pembina Pipeline Corp. has set a target of 2023 to start up production in Alberta from a C$4.5 billion ($3.4 billion) petrochemical project with its Kuwait partner.

Pembina’s Canada Kuwait Petrochemical Corp. partnership with Kuwait Petroleum Corp. plans to build the plant near the Alberta capital, Edmonton.

The package includes C$300 million ($225 million) in royalty credits granted by the Alberta government to the project builders, for them to transfer to gas-liquids producers in exchange for raw material supply commitments.

The new plant will use 23,000 b/d of gas-byproduct propane to make 550,000 tons per year of polypropylene, a key ingredient in plastics and synthetic materials widely used in global manufacturing.

Construction is underway on a similar plant aided by the Alberta government, also in the Edmonton area. Inter Pipeline Ltd. is building a C$3.5 billion ($2.6 billion) plant to make 525,000 tons/year of polypropylene from 22,000 b/d of propane. The subsidy program is providing C$200 million ($150 million).

Both petrochemical projects are rooted in growth expectations for liquids-rich gas production from shale and tight deposits tapped by horizontal drilling and hydraulic fracturing in Alberta and British Columbia (BC).

Pembina forecasts Western Canadian propane supply will exceed 300,000 b/d by 2035, an increase of about 50% over current regional output. The gas-liquids growth outlook also drives propane export terminal construction on BC’s Pacific coast.

The government assistance for Alberta petrochemical projects is part of an economic diversification policy aimed at increasing the value and employment generated by tapping provincial resources. The Alberta industry aid program also fosters refinery and upgrader projects for oil sands bitumen.