Nova Chemicals Corp. has improved its long-term plastic feedstock picture at its largest Canadian site by agreeing to purchase the total ethane output of a Hess Corp. plant in Tioga, North Dakota.
Calgary, Alberta-based Nova announced the deal July 15. Under terms of the deal between Nova, New York-based Hess and Mistral Energy Inc. of Calgary, Nova's polyethylene/ethylene site in Joffre, Alberta, will receive 100 percent of the ethane produced at Hess' Tioga gas plant beginning in the second half of 2012. Mistral will build a pipeline between the two sites.
Nova CEO Randy Woelfel described the supply deal as an exciting opportunity for Nova Chemicals and Alberta, as it is the first time liquids from the Williston Basin will flow north and tie in to the existing Alberta infrastructure.
Nova operates 2.4 billion pounds of annual PE capacity and 4.8 billion pounds of annual ethylene capacity in Joffre. The firm also makes PE at two sites in Ontario. Nova long has claimed to have an advantage over competitors by sourcing lower-priced plastic feedstocks from the Alberta region.
The pipeline's initial ethane capacity will be about 45,000 barrels per day, with the potential for that to be expanded to 60,000 barrels. Nova officials added that the supply deal is one of several projects that the firm is working on to complement traditional ethane supply sources in Alberta for use at Joffre.
Nova ranks as one of North America's largest PE makers and also is a 50 percent shareholder in Ineos Nova, one of the region's largest polystyrene producers. The firm also produces its own expanded PS and styrenic copolymers.
Nova was acquired in mid-2009 by International Petroleum Investment Corp., a state-owned firm based in Abu Dhabi, United Arab Emirates. IPIC then took Nova private.
In the first quarter of 2010, Nova registered sales of $1.4 billion, an increase of more than 40 percent vs. the year-ago quarter. The firm also showed a $94 million profit after losing $123 million in the year-ago period.
Nova's PE business recorded a first-quarter operating profit of $80 million an improvement over a year-ago loss of $7 million.