The Industrial Heartland is facing some hurdles when it comes to global competitiveness.
On Jan. 17, an audience of more than 1,000 attendees at the Alberta Industrial Heartland Association’s 2019 stakeholder event listened intently as Mark Plamondon, the association's executive director, outlined barriers faced in the heartland.
“(Foreign) investment is down significantly,” he said. “Companies who have been operating in Alberta are now looking at the United States and Mexico for their growth.”
Poor access to market – with Alberta Industrial Heartland land-locked and located far from places that use its products – costs to get oil to the coast and further costs to ship across seas, regulatory and environmental red tape and other municipalities offering better attraction packages to investors, are some of the issues the region faces.
Malcolm Bruce, CEO of Edmonton Global, said minimum wage and carbon taxes have also impacted companies in their efforts in attracting international investment.
Bruce said in order to amp up global competitiveness, the Industrial Heartland needs to be ready to respond to interest among investors. Return on investment plays a large factor, with potential partners looking to the U.S. to make more profitable deals.
Ian MacGregor, North West Refining president, said the Sturgeon Refinery has potential to churn out one million barrels of diesel each day. But it could take a few decades for capital costs to drop off.
He said the potential refining capacity is large enough to attract a few oil giants, but many companies have already left the table. Instead, they’ve decided to turn to U.S. refineries that are established and don’t carry heavy capital costs.
“We can’t compete because we’re new, but eventually we’ll get that money paid off,” he said.
The Sturgeon Refinery has been in the works since 2008, and has a value of roughly $8.5 billion.
Although it’s taken a decade to build and start, MacGregor said it’s crucial for operations at the Sturgeon Refinery to hit the ground running.
Just as coal operations have shut down in Alberta, he said refineries could face the same fate. High levels of carbon are produced in the process of refining crude oil into diesel, and although that can’t be changed, industry can adapt.
“We have to protect this, we have all the tools to protect it, but if we don’t utilize those tools we’re going to end up where coal is,” he explained.
But both Plamondon said the Industrial Heartland does have some edge when it comes to attracting global investment. Its "tremendous infrastructure," network of pipelines and skilled workforce give the region an edge.
Competitive edge
Plamondon said the Alberta Industrial Heartland’s competitiveness would best be measured by how much capital investment is poured into it.He noted that the government’s three programs – the Petrochemical Diversification Program (PDP), the Partial Upgrading Program (PUP) and the Petrochemical Feedstock Investment Program (PFEP) – have been helpful for industrial growth in the region.
But moving forward, he said he’d like to see the PDP crafted into regulatory framework.
During the stakeholder event, Premier Rachel Notley said the government is focusing on value-added resources, potentially attracting $28 billion in new investment to the province.
She said the NDP government is currently in discussion with 14 companies, with the intention of building a project focused on one of the three provincial petrochemical programs.
The government would also encourage economic growth through royalty credits, grants or loan guarantees.
Of the 14 companies, eight would be located in the Alberta Industrial Heartland. The investment would equal $20 billion, creating 16,000 construction jobs and 1,800 permanent jobs.
