This section provides an overview for ethane:

In Alberta, ethane (C2) is recovered from the raw natural gas stream or from gases produced as by-products of bitumen upgrading, called off-gas. Off-gas is a mixture of hydrogen and light gases, including ethane, propane, and butanes.

Ethane and other natural gas liquids (NGLs) are recovered mainly from the processing of natural gas. Field gas processing facilities ensure that natural gas meets the quality specifications of natural gas pipeline systems, which may require removing NGLs to meet pipeline hydrocarbon dew point specifications. A few field plants are also capable of extracting ethane as a specification product or as a C2+ mix and are referred to as deep-cut facilities.

Gas processing plants capable of extracting C2+ mix NGLs are typically tied to C2+ mix NGL gathering systems that move liquids to NGL fractionation plants in the Fort Saskatchewan area. Ethane recovered at field processing plants, NGL fractionation plants, and straddle plants is shipped on the Alberta ethane gathering system to the Alberta ethane market, where it is then used as feedstock for the petrochemical industry to produce ethylene and other products.

Gas reprocessing plants, often referred to as straddle plants, recover NGL components or NGL mix from marketable gas. They are usually located on main gas transmission pipelines at border delivery points. Straddle plants remove much of the ethane, with the degree of recovery being determined by the plant’s extraction capability, contractual arrangements, and product demand.

Alberta also imports ethane produced in North Dakota via the Vantage pipeline, which came on stream in June 2014, to meet provincial demand.

To address the tight supply of ethane in Alberta, the provincial government implemented the Incremental Ethane Extraction Program (IEEP) in 2006 and amended and extended it in 2011. The IEEP encourages ethane and ethylene production from bitumen off-gases from upgrading and from natural gas to help meet growing demand by the petrochemical industry. Alberta’s petrochemical industry is the largest in Canada and depends on the availability of competitively priced ethane to remain viable. Ethane is used as a feedstock in the petrochemical industry to make ethylene, a component used for manufacturing a variety of plastics and chemicals.

After January 1, 2017, only ethane consumption related to “tagged” sources (specific projects tagged on or before December 31, 2016) as identified in an advanced ruling process may be eligible for fractionation credits until December 31, 2021. Fractionation credits are given to petrochemical companies that consume incremental ethane for value-added upgrading to ethylene and derivatives. Credits are owned by the company that consumes the ethane or ethylene and can be sold to either a natural gas or bitumen royalty payer to be applied against its royalty obligation.