Western Canada hews petrochemicals niche
Calgary, Alberta — They are popping up all over the place. Multimillion dollar pieces of hardware - chemical plants - are making dramatic appearances on Canada's table-top-flat prairies or in the shadows of the majestic Rocky Mountains.
Western Canada is beginning to play its role of petrochemical prodigy to the full.
In industry jargon, these are ''grass roots'' plants. They are integrated complexes built systematically from scratch.
Alberta is the hub of this frantic industrial adventure, where a unique alliance has been forged between a government seeking industrial diversification and cocky private capital that doesn't mind taking chances. With about $1 billion (Canadian) in physical plant already in place, Alberta is clearing ground or drawing up blueprints to at least double chemicalmaking facilities through the 1980s.
Where tumbleweed, native grass, wheat, and barley used to grow, a new host of products, including methanol, ethylene, anhydrous ammonia, nitric acid, ammonium nitrate, urea, polyethylene, polyvinyl chloride, carbon black, glycols, chlorine , caustic soda, styrofoam, acids, acetates, herbicides, and fertilizers are pouring forth.
The key to all this newfangled activity is natural gas. This plentiful and relatively cheap feedstock serves as both the base and the insurance to the petrochemical grand design unfolding here. It was the energetic and, some say, unconventional people from Dow Chemical Canada Ltd. and their equally daring American parent who first put the word about the local petrochemical potential into the ears of attentive Alberta politicians and their business supporters in 1974.
Dow had already correctly forecast the effects of boosts in the price of crude oil used as a feedstock on the petrochemical industry in Europe and the US. It then accurately predicted the major shifts that were to occur in the global marketplace. Its motto was simply that security of feedstock and political stability will outweigh other considerations, including the rather extreme distances between Alberta and prospective customers around the Pacific rim.
Many of the developments that followed came through Nova, an Alberta Corporation, formerly Alberta Gas Trunk Line Company Ltd. It became the catalyst for the petrochemical growth here through a combination of good political moves and an early realization that there was indeed money to be made on plastic garbage bags and toys, as well as on more sophisticated intermediate and finished products.
Robert S. Blair, Nova's president and the nearest thing Canada has to a perpetual motion machine, grabbed the commercial opportunity afforded by the Alberta government's devotion to the cause. By riding the petrochemical tiger all the way, he enhanced his company's position as the exclusive shipper of gas within the province.
Seven years and hundreds of millions of dollars later, little in the way of petrochemicals can happen here without the approval and participation of Dow and Nova, whose near-monopoly position has been challenged by some latecomers.
But the Alberta petrochemical experiment is by no means out of the woods. In many aspects, in fact, it's only now coming to grips with the problems inherent in the business. It is, for instance, still waiting to see how other chemical companies will react to its less-expensively made products.