The government of Alberta has announced that it will extend the Incremental Ethane Extraction Program to promote the extraction of ethane and ethylene from refining and upgrading off-gas.

The program is designed to encourage the recovery of valuable chemical feedstocks (such as ethane and ethylene) from off-gases, increase the availability of those feedstocks for petrochemical processing, and to foster capital investment in value-added manufacturing of petrochemical derivatives within Alberta.

The program was first introduced in 2006, and was originally designed encourage the extraction of ethane and ethylene from natural gas only. $310m of the $350m originally committed remain in the program.

The extraction credit, which belongs to the company that consumes the extracted product, remains at $1.80 per barrel of ethane or ethylene extracted from natural gas. The credit for ethane or ethylene extracted from off-gas has been set at $5.00 per barrel. Credits may be bought and sold, and may be applied by a royalty payer against their royalty obligations to the government.

The government estimates that capturing ethane and ethylene and using them in manufacturing could reduce emissions from the oil sands by up to one million tonnes of CO2 annually. Petrochemical producers are also happy with the move, noting that the changes will help them secure stable feedstocks and will encourage investment in petrochemical production.