Listen to the Episode With Mark Plamondon of The Industrial Heartland Association Here:


Discover leading indicators for investment in Alberta’s Industrial Heartland and its growth constituents as Mark Plamondon, Alberta’s Industrial Heartland Association’s Executive Director and host Victoria Meyer discuss the shift towards low carbon energy products and the region’s natural competitive advantage.

Tune in to gain insights into talent development, infrastructure support, and the region’s potential to become a global destination for capital. 


Don’t miss this insightful conversation between Victoria and Mark on The Chemical Show and learn more about the following:

  • Introducing Alberta’s Industrial Heartland Association
  • The Significance of Dow’s Path2Zero project and first Net-Zero ethylene cracker
  • Building alignment and collaboration across municipalities, governments, and investors
  • The role of robust tax incentives in welcoming investment
  • Celebrating Alberta’s Industrial Heartland Association 25th Anniversary in 2024

 

Killer Quote: “Decarbonization, low-cost feedstock, and a collaborative framework: the industrial heartland is not just a destination, but a global leader in sustainable energy investments.” – Mark Plamondon

 

Additional Links:

Dow’s Board of Directors Approves Final Investment Decision for Path2Zero Project

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Watch Victoria and Mark’s Discuss The Industrial Heartland Association on Youtube Here:


Alberta’s Industrial Heartland’s Competitive Edge in Petrochemicals with Mark Plamondon

Hi, this is Victoria Meyer. Welcome back to The Chemical Show. Today, I am speaking with Mark Plamondon, who’s the executive director of Alberta’s Industrial Heartland Association. Mark is a seasoned business executive with over 25 years of experience in management, operation, optimization, and financial analysis, primarily in mining processing operations. Mark joined Alberta’s Industrial Heartland Association in 2017 and leads the organization’s business development strategy. He is really critical in building and enhancing relationships with investors, governments, and other stakeholders across the globe. Mark, welcome to The Chemical Show.

Good afternoon, thanks for having me here Victoria.

Absolutely. Mark, what’s your origin story? What got you interested in mining and investments, and ultimately led you to where you are with Alberta’s Industrial Heartland Association?

So I’ve been very fortunate throughout my career and I’ll talk about how I made my way up to Fort Saskatchewan, which is where the offices for Alberta’s Industrial Heartland are. Basically, if I look back to university days, I did an engineering degree at the University of British Columbia in Vancouver. One of the strengths of the university and engineering was mining and metallurgy. And I ended up getting a metallurgical engineering degree. That put me in a position to work in mining and metallurgical type operations, which led me then to work for a company called Sherritt Gordon, which changed their name to Sherritt and then Sherritt International. Their refining operation is based in Fort Saskatchewan.

That moved me from British Columbia, where I was working elsewhere, and came up to Sherritt in Fort Saskatchewan. That’s how I got planted in Fort Saskatchewan, but that opened up a wide range of doors because at that time, Sherritt was a nickel and cobalt refining operation and they were in the middle of a huge growth period. They were expanding significantly and had a lot of capital going into Cuba and a lot of operations in Cuba. They were expanding and buying a coal mining company, and looking at mines in Madagascar. That just positioned me really well, it’s obviously way more fun to be in a growing company as opposed to a shrinking company, because there’s just a wide range of opportunities, and the company needs people to go out and work in these opportunities.

I was given a wide range of opportunities. I worked in a number of international operations and different things. I was also able to, because of the proximity to the University of Alberta, I was able to get my MBA from the business school at the University of Alberta. Between the engineering degree, the MBA and then the international operations in mining and metallurgy, it was a great combination. When the Industrial Heartland was looking for an executive director, since it was here in Saskatchewan and I had a range of experience working with international investors, being in front of boards, being in front of both equity and debt holders, which I had done all through my career. It positioned me quite well to understand what investors are looking for, what is needed to attract capital, so it worked quite nicely.

The office for the Industrial Heartlands is here in Fort Saskatchewan and I’m familiar with the area based on my past work experience. So that’s what brought me up here, and I’ve been doing this since 2017.

Industrial Heartland Association

That’s perfect. So can you tell us a little bit about the Industrial Heartland Association, because I think people may not be that familiar with it.

Alberta’s Industrial Heartland Association is an association of municipalities. Each of these municipalities has land in a heavy industrial cluster called Alberta’s Industrial Heartland. The municipalities are the city of Edmonton, Fort Saskatchewan, Strathcona, Sturgeon, and Lamont counties. The industrial heartland sits in the northeast corner of the Edmonton metropolitan region in Alberta. Your listeners are probably throughout North America, I would guess.

I’m thinking hockey, that’s what I’m thinking.

That’s right.

Great history of sports and a strong strength in hockey, so that’s right. The Edmonton region is very well known for hockey, but in the northeast corner of the region sits Canada’s largest hydrocarbon processing region called Alberta’s Industrial Heartland, and a little bit of land spans each of those municipalities. So those municipalities all contribute some funding to the association. We have a total of 10 people in my shop here, and the purpose of the association primarily is to market the region and to work with companies around the world when they’re looking to build their next petrochemical or large scale value energy project. When they’re considering all jurisdictions, whether it’s Gulf Coast or Middle East, or Europe, China, wherever, we want them to consider the industrial heartland as one of their jurisdictions. Then we work with these companies around understanding the region’s competitive advantages, we’ll make introductions to potential joint venture partners that will walk them through the regulatory process. State selection services and others will do a number of those types of services to help companies figure out if their next capital investment makes sense in the Industrial Heartland.

That’s the reason to be an association, but there’s a couple of other pillars. We also have a couple of folks working in government relations, and this is primarily to help the provincial and federal government understand the importance of this region. We want to be able to have input and conversation as both the provincial and federal government are shaping policy or incentive programs.. We want to be able to try to have input into that and to help that process along. I’ve also got somebody here focused on community relations and communications. So this is social license, and we can talk about this a little bit as we go, but if you want to grow an industrial area, you need support from your community.

You’re way better off if you have a welcoming community than a hostile community. So that dialogue with community and communication is really important, and we work closely with the industry in this area.

Yeah, those are all really important things. In my prior life, if you will, when I was with Shell, I was at the front end of what is now Shell Pennsylvania, and then the new polyethylene investment that Shell has started up recently.

We worked with a number of associations or economic development groups out of the various states because site selection is significant, and figuring out how to optimize location and resources as you talk about working with governments to understand what the impact is on the quality of life and opportunities, and then getting the appropriate support along the way is really critical to making those investments.

Yeah, I think the service is most useful for new entrance. For companies that have been operating here for decades, they know their business. They know the workforce. Of course, we partner on a lot of things, but really, they’ve got substantial expertise. But if you’re a foreign company, and you’re looking in this jurisdiction for the 1st time, the service really supports a lot of the activities and helps them to accelerate the activities. You don’t even know where to start in some cases if you’re a foreign company looking to invest. Did you ever make your way up to the industrial heartland then? Because, of course, Shell Scotford is one of their key sites.

I never did. I’ve spent some time in Canada, in Calgary and of course, we talked about BC and skiing. I’ve made my way to Whistler because that was pretty awesome. But I haven’t been up to Fort Saskatchewan or to Scotford, although I did some work with those facilities, but from afar.

Okay. Yeah, that’s one of one of Shell’s five global chemical parks, Shell Scotford here in the industrial heartland.

And Shell is very proud of it. Of course, Dow as well, recently announced their final investment decision for their Path2Zero project, which I know they and others are super excited about the first net zero ethylene cracker which is going to be there at Fort Saskatchewan. So what’s significant about that investment for you?

It’s such a wonderful announcement for the region. Congratulations to Dow and everybody involved in that project. There’s lots of significant things about it. Of course, the magnitude is significant. Of course, this is a multi billion dollar investment. And, of course, as you mentioned, the world’s 1st net zero ethylene manufacturing facility. But the one point that I like to emphasize about this investment and why it’s so critical for us here is that it really sends a signal to the world.

A company like that can put capital anywhere and have capital projects all over the world, so for them to choose the industrial heartland for this first project to go net zero, it just sends a message to the world. Look, this region has obviously got the low cost feed stock, the carbon capture sequestration capability, and the overall value proposition that leads to a company like Dow choosing this jurisdiction over anywhere else in the world. There’s a great marketing story for the region, right? So when we’re talking with companies now around the world, and we’re pointing out the value proposition here, you’ve got evidence that it is a jurisdiction where companies can not only meet their economic goals, but also their environmental goals, because it’s evidenced by Dow reaching their final investment decision here. So it’s very exciting. We think it’s a great project for the region. And Dow, of course, has been a strong corporate citizen in this region. So we’re so happy to see them expand on their current site here.

Yeah, I agree with that. They have been there in Fort Saskatchewan for such a long time. It’s a great statement for them to continue to be there and to continue to invest because, like you say, there’s many choices that companies have when they’re looking to invest. Of course, we’re fortunate in North America with the ethane bases to have feedstock, to have abundant natural resources. Then today with carbon capture and sequestration, which is such a critical tool for the petrochemical industry, that’s a great fit.

Yeah, so that’s the one-two punch right there. As you said, some of the lowest cost ethane feedstocks in the world, but the carbon capture sequestration capability, it’s not like some pie in the sky idea. Those assets have been in the ground operating here in the heartland. The Shell Quest project was built and has been sequestering carbon dioxide since 2015. The Alberta Carbon Trunk Line, which is another asset in the region, that’s been in operation since 2020. And it has capacity of 14.6 million tons a year of CO2 of which about 10 percent is being utilized.

So there’s substantial capacity of pipe in the ground and capability to sequester today. It’s not something you need to build 5 or 6 years from now, and you hope that it will work and you hope you get the support space and the sequestration rights and all of that’s in place. The regulatory is in place, the assets are in place and you’ve got those assets here now, which adds competitive advantage today. If you’re thinking about de-risking a project, there’s one whole component of your project, the carbon sequestration, carbon management component, which is already a leg up compared to other jurisdictions in the world.

Yeah, absolutely. And I did not realize that those had been in place for so long because obviously there’s still much discussion across the U.S. and across the world about building more carbon capture assets, but to have them already in existence, operating de-risked, as you say, is critical.

And with capacity, it’s not like they’re at capacity. So that’s a really strong statement for this region. That is a piece of infrastructure that just really adds to the value proposition. I started here in 2017, and it’s been interesting to see how the conversations have developed around the world since 2017.

You can’t have a conversation today on a large scale petrochemical or value add energy project without talking about carbon management. That’s just how it goes today. Back in 2017, that wasn’t quite the case. You didn’t have as much dialogue on this, but today it’s just part of the conversation. It is just standard. How is a company going to manage their carbon? What does the CCS look like? What’s the carbon price framework? What’s the regulatory framework? All of these things now are just standard conversations. So having the carbon capture sequestration infrastructure in place and operating here and companies that have the capability to do this stuff, I think that’s a real strength for this region.

I think that was part of the overall thought that Dow had here, because the Path to Zero project is utilizing hydrogen production and CCS to decarbonize their site.

So Mark, one of the things you talked about is how you really provide that interface role with the municipalities and governments as well as the investors and helping understand the value. And I know, and certainly others do as well, that creating tax and other financial incentives becomes a really important component of a project decision. Can you touch on that? What does that typically look like if you’re able to at all?

Absolutely, and you’re exactly right. Government incentives are a part of the overall competitiveness framework in jurisdictions. That is really table stakes these days. I’ve really recognized that these large scale energy projects provide economic value and economic activity for decades. Especially here in the heartland, the projects here, their feedstock may move around, but the assets here stay and run for a long time. The 1st facility was built in the 1950s. The next one in the 60s, and so this company has been operating here for decades and decades.

The federal provincial municipal governments here all recognize how important it is to make sure that we level the playing field on a competitiveness framework. So there is some need for incentives. Fortunately, we have got support from all 3 levels of government for the value add energy investments here. The federal government has a range of investments. They’ve rolled out things like the carbon capture CCUS tax credits. They’ve got incentives and tax credits for hydrogen or clean energy type projects.

At the provincial level, the government of Alberta really has stepped forward a few years ago. They put in place what’s called the Alberta petrochemical incentive program. I really like the way that program is structured. It is structured that once a multi billion dollar or hundreds of millions of dollars petrochemical facility is built, then that facility will receive grants of up to around 12 percent of the eligible capital over the next 3 years. So it does two things. It provides cash flow directly in the form of grants in the 1st few years of operation to really help the company recover their capital, but it does it in a way that doesn’t really put the incentive at risk, or doesn’t put the taxpayer at risk if the project doesn’t go ahead, so you’re not providing it before the project is built.

The project needs to be operational and then the incentive flows. So all of the economic activity from construction flows into the region and then ultimately into the government in terms of its taxes. Then you get grants back up to 12 percent of capital over the first three years. So that is a tremendous incentive program from the province. Then the municipalities put forward what’s called the Heartland Incentive Program, and they put bylaws in place that also will provide tax exemptions at the municipal level. Up to 2.5 percent of eligible capital for projects that are built again.

It’s not before they’re built, it’s once they’re built and operating they get a tax exemption. But what that does is it provides certainty to companies that when they hit the criteria and they build the facility that they will receive a direct and meaningful incentive that helps with the economics of their projects. Hence the competitiveness of this region.

It sounds like it and, as you and I both know from having probably run a lot of economics on projects and stuff, the sooner that those incentives can hit and improve cashflow, the better it is for everybody. It’s great for the locale. It’s great for the company. And the ACC, American Chemistry Council, and others do a lot of benchmarking around what the economic impact of a petrochemical investment is upon the community. The last number I saw was for every job created at a site, something like six jobs are created in the community. So it’s schools and grocery stores and restaurants and other workers and employment. Then you think about logistics and all of that and it becomes an economic engine for the community for decades.

That’s one of the messages that we’d like to talk to governments about. It’s not something that is just, close shop and move to another jurisdiction. It is in the ground and operational for decades. The nice thing about the industrial heartland, because the facilities here operate off some of the lowest cost feed stocks in the world. Once the capital is in the ground, you’re now operating on a marginal revenue and marginal cost basis. So you’re going to have a profitable facility, or at least that’s what’s been demonstrated here. You have profitable facilities for decades. They pay taxes for decades that provide jobs for decades and economic activity for decades.

So we think there’s a great story here. I think that the alignment across the federal, provincial and municipal governments in order to provide incentives to companies is also a great story that we like to tell investors.

the industrial heartland association helps companies explore business options in the region

A very unique alignment to have that all tied together. That’s great. So we talk a lot about customer centricity on The Chemical Show. It’s one of our hot topics. You obviously have a very wide range of customers and stakeholders with Alberta’s Industrial Heartland Association. Site selection and capital investments are tough decisions. They’re very complex. It involves a number of people and a number of factors.

When you think about your customers, who do you think of and then what do you find critical to building that alignment and to building that customer focus?

I view our shop and I view ourselves, first of all, as a collaborative extension of the municipalities. So we’re representing the municipalities in a collaborative effort on the global stage. Our customers, there’s all sorts of stakeholders for sure, but our customers primarily are going to be companies that want to figure out their next capital investment. So our first focus is providing quality service to companies, which includes providing credible information, providing the right contacts and insight into what’s happening in the industrial heartland site selection services, but I’m so focused on providing credible services. We just want to be professional, factual, and procedural. Provide the information that’s requested, because if you take that 1st meeting with the company, you need to get the 4th meeting.

So you need to be credible and you need to provide the information that’s going to help them advance their projects. If you’re going to provide service to a company for their next capital investment, you need to have the framework that is going to be conducive for investment. All of the components of that framework, so competitiveness. We work with governments to help ensure competitiveness. We help with provincial municipal governments on infrastructure to ensure the infrastructure is in place, all in line of trying to meet that end goal of getting responsible investment here in the industry and for other stakeholders.

The community is very important and it’s a long game with the community. You have to build trust up over the long term work with companies collectively so that we ensure information is provided to the communities here so that there is a feeling of trust and dialogue and then ultimately support for growth in the region. And that’s not just us. We do that in a collaborative effort amongst with the industry and other associations here. We have an organization here called Life in the Heartland, and it’s a collective amongst four organizations specifically to build community engagement and community trust and community relationships. So they support growth in this region. While in simplistic terms, our customer ultimately is the company.

But there is a number of facets of this value proposition that needs to be worked on continuously in order to provide value for the region.

Here in the Gulf Coast and really, almost across the world, we’re talking a lot about talent and talent availability. When you look at the energy and petrochemical industry in the U.S. Gulf Coast, the average age of employees is 52 or something. Which means many are retiring. When we look at making an investment and building, you need the construction resources. You need operator resources. How are you or the communities engaging to develop talent and ensure that the workforce is in place? Because that is such a critical component of success.

There’s all sorts of constraints that are looked at by companies when they’re considering their projects. Feedstocks, land, and other things but talent and the workforce is definitely a component that companies look at when they’re looking at their next project and where it should be sitting. Our involvement or our participation in developing talent, of course, we’re not directly responsible for developing talents.

There’s post secondary institutions, there’s polytechnics in this region that are best in class. The companies, they also see that they have a lot of their workforce in that boomer age and know that a wave of retirements are probably going to happen. There’ll be a huge demand for new folks and new craft and skilled labor and all that. So our involvement more is given that we’re at the very pointy end of the spear and conversations around investments in this region and what’s coming. We try to signal to the region and to the governments in this region, municipal, provincial, and even federal, the magnitude of investments that we’re having conversations about, the total magnitude and type of investments that could be coming here. That leads to a total investment landscape of X certain amount, which leads to an estimate of how much skill labor, how much craft, how much apprenticeships. That allows those folks who are responsible for programs and funding apprenticeships and programs and schools, to get a better view of what’s coming and position themselves to provide that framework to help drive development of talent.

So that’s part of it. The long game is school programs. The short game is drawing talent from elsewhere. That is the nature of having a robust employment for lots of jobs in this area based on the activity that’s happening here. That will draw skilled craft and operators and construction workers from areas around. But again, signaling the amount of activity here raises awareness and other jurisdictions of what’s going on here to try to attract that talent here. Our role is indirect in terms of signaling and communicating what we see coming.

Then those who are responsible for funding these programs and putting the programs together, they can do so with more confidence, knowing what’s coming down the pipe

Yeah. It’s a bit of a symbiotic relationship, right? You have to align everybody and keep the communications flowing.

Certainly, and there’s the folks who run the post secondary institutions here, they all know how to set up these programs and they know where the funding is. We just want to make sure that we have good dialogue around what we see coming so that they can do what they need to do to get the programs in place.

There’s been a lot of evolution across the markets and industries in the past three years. So the 2020s have been unique versus other decades, how do you see that affecting investment? What are the leading indicators that you’re looking for when you think about investments in the industrial heartland and how you can support that growth in those constituents?

To take your point on the early 2020s, a lot of the conversation at that time was reshoring and supply chains here in North America. And we thought that there might be significant economic activity and capital investment associated with some of that. Maybe some of that is the case. But I think the biggest trend that we’ve seen in the 2020s in terms of leading indicators, is really driven more by the global push on decarbonization as governments around the world are setting targets and ambitions around reduction of greenhouse gases and industrial decarbonization and decarbonizing hard to abate sectors. The search is on, from foreign companies to look around the world to see where can they put their capital in order to meet their own country’s needs for decarbonization. And here I’m talking about energy products. If you’re talking LNG, or hydrogen, or ammonia, at least on the hydrogen ammonia front you have a lower carbon footprint for those energy products than perhaps you could get elsewhere in the world. So I’d say, from a leading indicator standpoint, what’s been interesting here in the mid 2020s. Going into 2024 there’s tremendous global interest in decarbonization and low carbon energy products, which positions the industrial heartland so nicely because, the feedstocks already are unmarked. They’re fairly low carbon feedstocks compared to others and with the carbon capture sequestration that we talked about.

From an indicator and capital investment standpoint, I think that’s a trend that we’re really seeing that we think will put the industrial heartland, front and center on the map in terms of a place to put capital.

So this podcast is being published at the beginning of 2024. When you look ahead, what’s on your agenda for the year? What should we be looking for from you, from the Industrial Heartland Association and just, what’s the action and the movement going to be? What are you looking at?

Sure there’s a few things. Before I talk about, our business development activities and our marketing around the world. Next year is our 25th anniversary as well, so as an association we’ve been around 25 years. As a municipal collaboration that is really important to celebrate. I think the municipalities who started the industrial heartland really should be proud at taking a leadership position way back in 1998 when the initial sort of documents happened, and then the association was formed in 1999 and the bylaws were put in place. That was a really strong leadership position amongst the municipalities to take a collaborative approach to economic development of the large, heavy industrial space.

I think they should be proud of 25 years of what I think has been a really great level of activity and hopefully a good service for companies coming to this region. So that’s happening from our association next year. So you’ll hear that all year, we’ll be talking about our 25th anniversary.

25 years is a good milestone, particularly when you think about it in many ways is almost like a joint venture. It’s a collaborative group and partnerships are not easy to put together and it’s not easy for them to last and evolve for a quarter of a century. So that’s significant.

Yeah, I would agree with you there. And again, it’s another reason for the municipalities to be proud that they’ve been together for 25 years. There’s such a strong value proposition here that it’s really propelled. It’s helped the value and the service that the Industrial Heartland Association provides, which has really helped propel this area. I think that adds value to the entire region. So that’s also part of the story here for 25 years. Then with respect to our activities next year, I think we have to 2 ways I like to describe it.

We’re proactive because we have a proactive marketing plan, but we’re also reactive. Any company that’s gives us a call and says, we heard about you, or we met you at this conference or whatever it is, we want to consider our next capital. We will always respond to those who will work with company. So we’ll continue on the reactive front always, because that’s part of what we do. On a proactive side of things there’ll be more excitement around petrochemicals. I think that the announcement of Dow will really trigger a lot of global petrochemical companies to maybe take a second look at what’s going on in Alberta. We will be following up in those sectors, piggybacking a little bit off the great new story that’s happening here. Then the other trend that I will continue to work on, which I mentioned previously, all of the industrial decarbonization interests around low carbon products really gives us an opportunity to connect with companies around the industrial land and it being a capital destination for their capital.

Thirdly, we see what we call diversification projects, because they’re outside their typical petrochemical space. But, a lot of interest in critical minerals and battery precursor materials and not your traditional pet chem methane, ethane, propane space but still you take advantage of the advantages here, the infrastructure, the workforce, and the carbon capture sequestration for production of other intermediate products that can ultimately go into other value products in Canada. That’s where we see our activities. It’s always a little bit fluid. We’ll go where we’re seeing interest from companies, but that’s the general sense of what’s going to be happening next year.

That’s exciting. And I think you’re right, you have a great growth platform with the Dow announcement and with the carbon capture capacity that’s in place. Also of course, all the natural resources that the region brings. So I think that’s cool. I can’t wait to see what happens.

Yeah, we’re just so fortunate. The natural resources just put this region at a natural competitive advantage right off the top. But then being in the U.S. Gulf coast clustering has benefits too. As you grow your cluster, you continue to enhance the competitive advantages of the region.

That’s what we’re seeing, you start to hit a critical mass. There’s more outputs that become inputs for another facility. And there’s more optionality for companies to have a competition around their inputs for their facilities in the region. And as we’re growing this cluster, we continue to become more and more competitive, and continue to become more of a global destination for capital.

I think that’s right. Success begets success. And people want to be where successful businesses are.

Yeah, it starts to become self fulfilling as you get more and more competitive. Exactly. Success continues to follow up to that.

Great. Mark, this has been awesome. I appreciate you taking the time to join us today on The Chemical Show and sharing some insights from Alberta’s Industrial Heartland and more.

I appreciate the chance to have a conversation with you. Really enjoyed it and have yourself a great afternoon.

Thanks you too. And thanks everyone for joining us. Keep reading, keep following, keep sharing, and we will talk again soon.


About Mark Plamondon:

Mark Plamondon is a seasoned business executive with over 25 years of experience and expertise regarding the management, operation, optimization and financial analysis of mineral processing operations. Mark possesses an engineering degree from the University of British Columbia and an MBA from the University of Alberta.  As Executive Director of Alberta’s Industrial Heartland Association, Mark leads the organization’s business development strategy and works with his team to build and enhance relationships with investors, governments, and other stakeholders across the globe.