Feature Article

THE PETROCHEMICAL BOOM EXPLODES: 1996

Written By: Michael Dawe
Published By: Red Deer Advocate Centennial Book
Article Used with permission. © Copyright Michael Dawe and the Red Deer Advocate, 2007
2007-01-01

On Feb. 29, 1996, Novacor Chemicals and Union Carbide jointly announced the construction of a new billion-dollar ethylene plant at Joffre.

Union Carbide also announced the construction of a $385 million polyethylene plant next to its ethylene glycol complex at Prentiss.

It was fitting that the announcement was made on the February leap year day. It was the kind of news that does not happen very often.

Later, the announcements got even more impressive. Novacor indicated that it was seriously considering the construction of its own second polyethylene plant.

The following year, Amoco announced the construction of a linear alpha olefins (LAO) plant on Novacor’s land at Joffre. An announcement was also made by Novacor, in partnership with ATCO and Epcor, of the construction of one of Canada’s largest cogeneration plants, which would produce electricity and steam using natural gas.

Ultimately, the cost of the massive projects would total more than $2 billion. They were to create as many as 4,000 construction jobs. Not only were the plants to be among Canada’s largest industrial projects, they were to turn the Joffre/Prentiss area into the largest ethylene/polyethylene complex in the world.

The news could not have been more welcome.

Central Alberta’s economy had been battered throughout the 1980s and early 1990s by major downturns in both the petroleum and agricultural industries.

Unemployment was high, particularly for the construction trades. The public sector, which had long been a major part of the local economy, had been undergoing huge cutbacks following the election of the new. Klein government in 1993.

The growth in population for the city had slowed to a crawl.

In the five years between 1991-96, the number of residents had risen by only three per cent to 60,000, whereas in the 1970s and early 1980s, the population had risen by at least three per cent in each and every year.

A report released by one of the city’s major commercial real estate firms in early 1996, revealed that downtown office vacancy rates had jumped to 18.5 per cent, up from 12.7 per cent at the start of the decade.

Moreover, the provincial government announced a cut of $5.2 million in funding to Michener Centre, which at one time had been the largest employer in the community.

That was on top of the huge cutbacks announced in previous years to other major public employers such as the Red Deer Regional Hospital.

In mid-February, 1996, Red Deer’s city council announced a major cut in lot prices to try and stimulate house construction, which had plunged almost 40 per cent in a year. Reductions were also made to city development levies.

Now with the Novacor/Union Carbide announcements, the economic scenario for the community changed dramatically.

Ironically, it was the economic doldrums that helped prompt Novacor/Union Carbide and the other companies to make such huge investments.

Prices for natural gas, the raw material for petrochemicals in Alberta, were attractively low.

There appeared to be a plentiful supply of labour to meet the huge demands for construction workers, which the projects would create.

The cogeneration plant made sense, given that virtually no new electrical generation plants had been built for several years and provincial electrical deregulation made for some interesting future opportunities.

By the late 1990s, Central Alberta’s economic situation had changed dramatically. The oilpatch had recovered.

Red Deer’s population was growing by three per cent to four per cent per year again. New businesses and residences were springing up everywhere.

There was now an acute shortage of construction workers.

On Oct. 11, 2000, the Nova Chemical/Union Carbide E-3 ethylene plant at Joffre and the Union Carbide polyethylene plant at Prentiss were officially opened by Premier Ralph Klein.

He referred to the complex as "an engineering marvel" and "a billion-dollar nod" to the "Alberta Advantage."

He speculated on the development of a new plastics industry for Central Alberta using the polyethylene products. Red Deer and Central Alberta were once again well on the road to becoming one of the economic engines for all of Canada.

This article was written by Michael Dawe for the Red Deer Advocate’s Centennial Book. The Heritage Community Foundation would like to thank Michael Dawe and the Red Deer Advocate for permission to reprint these materials online. Please visit the Red Deer Advocate online.The images in the article are part of the collection of the Red Deer Archives. Please visit them online.