Volume 90 Issue 2 | p. 17
Issue Date: January 9, 2012 | Web Date: January 12, 2012

Cover Stories: World Chemical Outlook 2012

Canada Stays Strong

After a large growth in 2011, Canada will see modest growth in 2012
Department: Business
Keywords: Canada, shale, petrochemicals
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MODERATION
Growth in sales of Canadian basic chemicals and resins will slow in 2012.NOTE: Sales figures are based on 2002 constant Canadian dollars converted to U.S. dollars at the average 2011 exchange rate of $1.00 U.S. = $0.99 Canadian. a Estimates. SOURCE: Chemistry Industry Association of Canada
Credit: Chemical Industry Association of Canada
This graph shows how Canadian basic chemical sales have been since 2002 and projected through 2012.
 
MODERATION
Growth in sales of Canadian basic chemicals and resins will slow in 2012.NOTE: Sales figures are based on 2002 constant Canadian dollars converted to U.S. dollars at the average 2011 exchange rate of $1.00 U.S. = $0.99 Canadian. a Estimates. SOURCE: Chemistry Industry Association of Canada
Credit: Chemical Industry Association of Canada

The past year was a strong one for Canadian chemical producers, and 2012 looks to be shaping up nicely as well.

Canadian chemical sales climbed 18% in 2011 to more than $25 billion, according to the Chemistry Industry Association of Canada. The industry performed well by most other measures, too. Production volumes increased 10%. Exports rose 20%. Combined operating profits for chemical companies climbed 61% to a record $4 billion.

“The numbers are really strong,” says John Margeson, manager of business and economics for CIAC. “We’re almost back to where we were before the recession hit us, which is pretty good considering we lost some plants.”

A survey of CIAC members reveals that Canadian chemical makers anticipate a modestly positive 2012. They expect sales to increase by 2%, volume to rise by 5%, but operating profits to decline by 11%.

Shale gas, which has caused a petrochemical revolution in the U.S., has had a mixed impact on the Canadian chemical industry. On one hand, it has reduced feedstock costs in Canada by bringing natural gas prices down. On the other hand, it has led to shortages of ethane in the country’s petrochemical hub of Alberta because the province is producing less natural gas for export to the U.S. Ethane is extracted from this gas for use in Alberta.

The country’s largest chemical producer, Nova Chemicals, is taking matters into its own hands. The company has signed a supply agreement with Williams Cos. to get a stream of ethane from Alberta’s oil sands. And it is planning a pipeline that will bring ethane up from oil fields in the Williston Basin in North Dakota.

Nova is also seeking to tap into U.S. natural gas shale. It has signed supply agreements with Range Resources and Caiman Energy for ethane from the Marcellus Shale and a deal with Sunoco Logistics to transport the ethane from Pennsylvania to its chemical complex in Corunna, Ontario.

By lining up these agreements, Nova beat U.S. competitors to the punch, says Grant C. Thomson, Nova’s president of olefins and feedstocks. “It was a coup for Nova to really be in there first and put the first agreements together,” he notes. The company is executing a $250 million revamp of the Corunna plant so it can handle the extra ethane feedstock.

Nova is now conducting feasibility studies for potentially $1.5 billion in projects to expand the Corunna facility and build polyethylene plants in Ontario and Alberta. It expects to complete the studies by mid-2012.

 
Chemical & Engineering News
ISSN 0009-2347
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