By an OGJ Online Correspondent
CALGARY, May 18 -- Nova Chemical Corp. Pres. Jeff Lipton said guaranteed long-term supplies of ethane are essential to future expansion of Alberta's petrochemical industry.
"I don't believe that in the current structure anyone would have enough confidence to put in major new investment," Lipton told shareholders.
Lipton called for changes in Alberta's royalty structure to encourage the energy industry to keep gas liquids feedstock in Alberta. Royalties paid on gas liquids within Alberta are higher than those shipped to the US.
The issue has arisen since the Alliance Pipeline from Western Canada to the Chicago market began shipping gas along with liquids extracted in the US.
Lipton said long-term petrochemical growth in Alberta needs a royalty structure for ethane, propane, and butane that is the same whether they are exported or extracted in Alberta. In fact, he said there should be a lower rate for extraction in the province.
Lipton said the last two quarters have been difficult periods for Nova caused by increased industry capacity, higher gas and crude prices, and a softening of the US economy.
Lipton said he believes the industry is near the bottom of a cycle with little downside left.
