As B.C. and Alberta91ÂãÁÄÊÓƵ™s natural gas industry reaches out to international markets through LNG exports from the North Coast, a related petrochemical business is aiming for the fast-growing Asia market.

Calgary-based West Coast Olefins Ltd. has applied to for an ethylene plant to operate on industrial land at Prince George. The $5.6 billion project would share the site with a partner to convert ethylene into polyethylene pellets for export to Asia. Its feedstock is natural gas liquids produced from the Montney shale that extends from northeast B.C. into northwest Alberta.

West Coast CEO Ken James says the site is the best production point in North America because of its access to a long-established gas pipeline that serves Metro Vancouver, a long frontage on the CN Rail line to the main export outlet, the Port of Prince Rupert, and shore access to the Fraser River. The operation needs up to 1,000 employees in a region where the forest industry is in a deep slump.

During a business trip to Victoria, James spoke with Black Press reporter Tom Fletcher about the project:

TF: What makes B.C.91ÂãÁÄÊÓƵ™s Northern Interior a good place for this project?

KJ: One of the primary drivers was I wanted an existing pipeline and not needing a new one. We91ÂãÁÄÊÓƵ™ve seen projects fail on needing a new pipeline, and we avoided that.

TF: Have there been other projects like this proposed?

KJ: There are none in Prince George, but there is an existing natural gas line that runs all the way down past Prince George to Vancouver. Nobody91ÂãÁÄÊÓƵ™s been taking the liquids out. You91ÂãÁÄÊÓƵ™ve got an existing line with liquids in it, and as the price of gas has gone down, the producers are focused on the liquid-rich gas, so the content is actually going up.

TF: That91ÂãÁÄÊÓƵ™s the Montney shale that extends from northeast B.C. into Alberta.

KJ: Yes. The Horn River shale [farther north] is dry gas, so nobody91ÂãÁÄÊÓƵ™s developing it. The Montney91ÂãÁÄÊÓƵ™s liquid-rich, so everybody91ÂãÁÄÊÓƵ™s developing that.

West Coast Olefins CEO Ken James describes his $5B proposed plant in B.C.

91ÂãÁÄÊÓƵ” Tom Fletcher (@tomfletcherbc)

TF: Is this related to the LNG projects that we91ÂãÁÄÊÓƵ™re seeing come forward?

KJ: No, it91ÂãÁÄÊÓƵ™s using the existing gas line that91ÂãÁÄÊÓƵ™s been operational for 60 years. We91ÂãÁÄÊÓƵ™re not doing new production, we91ÂãÁÄÊÓƵ™re taking more value out of existing production.

TF: There91ÂãÁÄÊÓƵ™s a light oil refinery in Prince George. [Husky Energy the small low-sulphur diesel and gasoline producer to Tidewater Midstream for $215 million.] Is that related to your project? Do they compete with you?

KJ: We91ÂãÁÄÊÓƵ™re going to have about 20 per cent condensate that we91ÂãÁÄÊÓƵ™ll extract from the pipeline. We91ÂãÁÄÊÓƵ™ll be complementary. I91ÂãÁÄÊÓƵ™ve already met with them, and their CEO actually invested in my last company.

TF: What was your last company?

KJ: , a methanol project in Grand Prairie, Alberta that91ÂãÁÄÊÓƵ™s in development right now. It has some financial support from the Alberta government.

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TF: With West Coast Olefins, there91ÂãÁÄÊÓƵ™s an issue with Enbridge, which runs the pipeline you91ÂãÁÄÊÓƵ™re proposing to use. Can you explain that?

KJ: They91ÂãÁÄÊÓƵ™re proposing to do an equivalent straddle plant to take the liquids out at Chetwynd. They would use a 150 km pipeline and taking it back to Taylor, where they have liquids lines that would take it back to Fort Saskatchewan [site of Alberta91ÂãÁÄÊÓƵ™s new Sturgeon refinery]. That would kill our project.

TF: What would West Coast Olefins produce?

KJ: We91ÂãÁÄÊÓƵ™re going to make ethane into ethylene. There is an opportunity to turn the propane to propylene as well. They91ÂãÁÄÊÓƵ™re made into polyethylene and polypropylene. We are going to have a third party that will take that step, in Prince George. The market91ÂãÁÄÊÓƵ™s going to be Asia, not the U.S., so would you rather have it in Prince George or Edmonton?

TF: You have acquired a 300-acre site?

KJ: Yes. It91ÂãÁÄÊÓƵ™s already industrial land, beside the B.C. Industrial Park. It91ÂãÁÄÊÓƵ™s fee-simple land, which makes it a lot less complex, rather than touching Crown land. We91ÂãÁÄÊÓƵ™ve got about a mile of frontage along the CN main line, and our property goes right up to the Fraser River. We have the Fraser, the rail, the road, a population of 80,000 people, and the Enbridge pipeline runs 10 km from our site.

TF: And they have a competing project.

KJ: Yes. Their application is also in the B.C. Environmental Assessment Office. The Enbridge pipeline is a nationally regulated pipeline, because it crosses the border into Washington, Oregon etc. When an owner of a nationally regulated pipeline proposes a project on that, they automatically force their project into the national regulatory process, so their application is in the wrong regulatory body. That wouldn91ÂãÁÄÊÓƵ™t apply to us, because we don91ÂãÁÄÊÓƵ™t own the pipeline.

tfletcher@blackpress.ca
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