Aux Sable Canada Ltd. has struck a deal to sell ethane and ethylene from its Heartland off-gas plant to Dow Chemical Canada Inc. The financial terms of the agreement were not disclosed Thursday.
Aux Sable, a joint venture of Enbridge Inc. (TSX:ENB), Fort Chicago Energy Partners (TSX:FCE.UN) and Williams Cos. (NYSE:WMB), will be the first in Canada to extract ethane and ethylene from the byproduct gas of a bitumen upgrader.
The Heartland off-gas plant is under construction just north of Dow Chemical's complex in Fort Saskatchewan, northeast of Edmonton. Its feedstock will come from BA Energy's Heartland upgrader.
The "long-term" arrangement with Dow announced Thursday involves up to 8,000 barrels per day of ethane and ethylene. Aux Sable and Dow also have entered into a strategic alliance to develop future upgrader off-gas processing projects supplying feedstock for Dow in Fort Saskatchewan. Aux Sable's Sable NGL Canada affiliate is to build, own and operate these off-gas facilities, with Dow as the exclusive customer.
"A key element of our strategy is to be a leader in the processing of upgrader and refinery off-gas," stated Aux Sable CEO Bill McAdam. Aux Sable says its Heartland plant will have no sulphur dioxide emissions and "limited" emissions of nitrogen oxides, while the BA upgrader will cut its carbon dioxide emissions by 12 to 16 per cent by using clean gas as fuel instead of burning the off-gas.
For Dow Chemical Canada, "the oilsands represent a large, untapped feedstock source," said Jeff Johnson, president of the Canadian division of U.S.-based Dow Chemical Co. (NYSE:DOW). "Our alliance with Sable Canada allows us to secure a long-term supply of petrochemical feedstock."
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