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BC Premier Horgan tangled in knots
Calls for new refinery to offset surging gasoline prices, turning blind eye to taxes, industry’s lack of enthusiasm for refineries Gary Park for Petroleum News
British Columbia Premier John Horgan has now found himself wrestling with his own shadow as he opposes shipments of Alberta oil sands bitumen across British Columbia, while urging oil producers to build more refineries in Western Canada to help curb soaring gasoline prices at the pumps.
Faced with growing public anger over North America’s highest gasoline costs - C$1.60 per liter (the equivalent of US$4.50 per U.S. gallon) in the Metropolitan Vancouver area that include his government’s own tax grab of 35 cents a liter - he called for the petroleum industry to spend more on refining capacity in B.C.
Ignoring the well-established fact that industry majors, well aware of the high risks that accompany refineries, have spurned pleas to invest an estimated C$15 billion over five years for a refinery to process 100,000 barrels per day of raw crude, Horgan said he plans to talk to “gas (refined petroleum) companies about why they are not refining more product.”
If those discussions occur, Horgan will likely be told in blunt terms that the few refineries that have been built over the last 20 years are close to large population areas grappling with shortages of supply, whereas Vancouver has only one refinery and another five in Washington state that are operating at full stretch to meet their own domestic demand.
New legislation an issue He will also likely get an earful from the industry about his new legislation introduced a month ago for moving to zero-emission light-duty vehicle sales by Jan. 1, 2040. Any dealers who fail to meet target will face a fine of C$500,000 or six months in jail.
As Vancouver Sun columnist Vaughn Palmer observed, “At the same time (Horgan) is proposing that within 21 years it would be illegal to sell new vehicles that would be prime consumers” of the output from refineries he wants built.
“To put it another way, on the one hand the premier thinks the oil and gas companies are greedy gougers and on the other, he thinks they are stupid,” Palmer wrote.
Complicating Horgan’s grand scheme is the Canadian government’s Bill C-69 - endorsed by the B.C. government - which will require all major resource projects to negotiate a complicated environmental review process that industry sources warn will drive billions of dollars of investment away from Canada.
Palmer also noted that Horgan has failed to even suggest where a new refinery could be built in his province without even acknowledging the certain opposition from First Nations, environmentalists and other activists.
Financing issues As well, the premier made no reference to the protracted efforts by B.C. entrepreneur David Black to raise financing for his proposed C$22 billion plan to ship bitumen from Alberta to his proposed refinery north of Kitimat.
The plan involves turning oil sands crude into solid pellets for shipping by rail to the refinery on the northern B.C. coast where it would be processed into 400,000 barrels per day of gasoline, diesel and other petroleum products for delivery to global markets.
In addition, Eagle Spirit Energy, backed by First Nations, and Pacific Future Energy have rolled out plans to develop and/or ship refined products from the northern B.C. coast, regardless of federal commitments to ban crude-related tankers in that region that have also been endorsed by Horgan’s government.
After seven years of attracting a lukewarm response, Black believes his plan has gained a second wind with the election of Jason Kenney as Alberta’s new premier.
Having met with Kenney last August, Black said Kenney is interested in any plan that can move Alberta crude “safely and cheaply to the coast.”
Horgan agreed Black has presented one option, adding “I look forward to him entering the regulatory process to see if he has the wherewithal, in terms of capital, in terms of expertise, to pull that off.”
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