CALGARY, Alberta (Reuters) - The Canadian oil-producing province of Alberta will offer C$500 million ($357 million) in royalty credits in a bid to attract investment in new petrochemical facilities and help diversify its ailing economy, the government said on Monday.
It said the Petrochemicals Diversification Program is expected to support the construction of two or three new facilities that use propane or methane, components of natural gas, as feedstock to produce materials for products including plastics, detergents and textiles.
Deron Bilous, minister for economic development and trade, said the program is intended to mitigate the high cost of construction in Alberta, and could attract C$3 billion - C$5 billion in investment and create more than 4,000 jobs.
Alberta is the largest source of U.S. oil imports and its previously booming economy has been hard hit by the global crude price slump, with companies slashing billions of dollars in capital spending and laying off tens of thousands of workers.
Last week the left-leaning provincial government unveiled a review of energy royalties that left rates unchanged on existing oil wells and oil sands projects, and avoided adding more cost burdens to an industry already reeling from the lowest crude prices in more than a decade.
The royalty review included a recommendation that Alberta adopt a strategy of processing its natural gas into higher-value products.
“This is another way to diversify our energy economy and create good jobs in Alberta,” said Minister of Energy Margaret McCuaig-Boyd.
Companies will be able to apply to the government for royalty credits worth up to C$200 million for a single petrochemical facility, and credits will be awarded once the projects are completed and start processing feedstock.
Although petrochemical facilities do not pay royalties, the credits they earn can be traded or sold to oil or natural gas producers, who can in turn use them to reduce royalty payments to the government.
Editing by Alan Crosby and Jeffrey Hodgson