Building on a strategy to expand its petrochemicals business in Canada, Williams last week sanctioned the first propane dehydrogenation (PDH) facility in Alberta.

The PDH facility, to be built at Redwater fractionation facility near Edmonton for an estimated C$900 million, would be capable of producing 1.1 billion pounds/year of polymer-grade propylene, with the opportunity to double capacity in the future. The plant could be in service before the middle of 2016 pending permit approvals.

Williams, which has made no secret of its desire to build a PDH facility in Canada, today is the only company in the country that produces polymer-grade propylene, which is used as a feedstock in plastics manufacturing.

“We’re thrilled to be moving full-speed ahead on Canada’s first and only PDH facility,” said Williams Energy Canada President Dave Chappell. “The project fits strategically within Williams’ operations in Alberta, leverages our expertise in propylene and adds further value to a byproduct of oilsands upgraders. Once operational, this new propane dehydrogenation facility will expand market opportunities for Canada, feed the demands of North America’s growing petrochemical industry and allow for the creation of a new value chain in Alberta.”

Williams primarily would use propane recovered from its growing oilsands off gas processing operations, as well as local propane purchases, as feedstock for the new PDH facility. Plans are to convert the propane into higher-value propylene that could be transported to the U.S. Gulf Coast and sold to petrochemical producers. The associated hydrogen byproduct would be sold in the Alberta market. Williams is also exploring propylene market development for its Alberta production.

When producers convert Canadian oilsands into usable oil, the process produces an off gas byproduct that includes a rich mixture of natural gas, natural gas liquids (NGL) and olefins. Williams, which pioneered the process to extract the mixture at its Fort McMurray plant in Alberta, returns the natural gas to a third-party oilsands producer. The remaining NGL/olefins are then transported via Williams’ Boreal Pipeline to the Redwater fractionation facility near Edmonton for further separation.

Williams officials two years began building their already established Canadian petrochemicals business through an expansion agreement with Nova Chemicals Corp. to produce up to 17,000 b/d of ethane and ethylene (see NGI, April 4, 2011). The expansions to process off gas from oilsands included modifying the Williams plant near Fort McMurray and adding a de-ethanizer at the Redwater facility. Redwater is being expanded to produce around 5 million bbl/year of propane and 280 million pounds/year of polymer-grade propylene from off gas, in addition to other NGLs and olefins.

The operator last year took another big step in building petrochemical operations in Canada by clinching a gas processing agreement to extract, transport, fractionate, own and market the NGL and olefins recovered from off gas at an oilsands upgrader near Fort McMurray (see NGI, Oct. 1, 2012). The NGL/olefins recovered from the upgrader are expected to total about 12,000 b/d by mid-2015 and 15,000 b/d by 2018.

Capital costs for the PDH facility are to be funded from the operation’s future cash flow and cash on hand. For the dehydrogenation process, Williams selected Honeywell’s UOP Oleflex process technology, which is said to require less energy and water than competing PDH technologies.

Williams CEO Alan Armstrong said the company was “extremely excited about this project on many levels. We expect the PDH facility to deliver a very attractive return on investment as well as provide a long-term natural hedge of the propane volumes we control in our Canadian off gas processing business. Our planned PDH facility will enable Williams to capture the full value between natural gas and polymer-grade propylene, rather than just the value between natural gas and propane.”

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.