|
Pipe-dreaming publisher Plan to build Kitimat refinery and overcome opposition to Northern Gateway gets immediate thumbs down from wide range of groups Gary Park For Petroleum News
British Columbia-based newspaper owner David Black is trying to mix ink with oil.
The man who owns more than 150, mostly small, publications in Canada and the United States has spotted what he thinks is a new outlet for his entrepreneurial talents.
In an effort to break away from the contentious issues relating to Enbridge’s Northern Gateway pipeline plan, he called a news conference Aug. 17 to announce that he wants to build a C$13 billion refinery at Kitimat, on the northern British Columbia coast.
His dream is to capture the value-added end of the oil sands business by converting 525,000 barrels per day of crude bitumen into diesel, gasoline and kerosene before shipping the products to Asia.
Black argues his idea would overcome the British Columbia government’s resistance to Northern Gateway by keeping jobs and revenues within the province, estimating there would be 6,000 construction jobs over five years, 3,000 permanent positions and “thousands more” of spin off jobs.
“I’m hoping this will jump start a change in the debate,” he said. “Instead of just saying ‘no,’ let’s say how can we work with this to our advantage.”
No immediate support But the daring venture seemed doomed to fail within hours of being unveiled.
Even British Columbia Energy Minister Rich Coleman offered a muted response, saying a refinery, like all major projects, would have to successfully complete an environmental review.
Enbridge was even more tight-lipped, declining to comment on Black’s claim to have support from chief executive officer Pat Daniel.
It didn’t help that Black has no investors lined up.
Adding to that PetroChina, which has a stake in Northern Gateway, and other possible Asian buyers of bitumen have made it clear they want to do their own refining.
Black concedes he is trying to defy the odds.
He doubts Enbridge is “rooting for” his idea, because, like others in the industry, “everyone still wants to ship crude. I went to the industry a year ago, but I wasn’t able to convince them that they should invest in a refinery. I’ll keep at it.”
But immediate opposition He will also have to redouble his efforts to win over First Nations, one of whose leaders described Black’s refinery bid as “just the latest crazy twist” in the Northern Gateway saga, along with the British Columbia and Canadian wings of the New Democratic Party and environmentalists.
Josh Paterson, a spokesman for West Coast Environmental Law, said the refinery “is the most recent act of desperation to buy support for the Enbridge pipeline.”
He said Black’s “brand new” Kitimat Clean Ltd. “won’t build trust by holding a surprise press conference in Vancouver to tell communities hundreds of kilometers away that a massive refinery is coming their way, or by filing for government approval before they’ve consulted with communities. British Columbia is not for sale and the right decision would be for Enbridge to cancel its pipeline and supertanker project.”
Karen Wristen, of Livings Oceans Society, said Kitimat Clean, like Enbridge, is asking British Columbians to “carry the risk” by proposing to convert bitumen into refined products that would float on the ocean in the event of a spill and kill seabirds, instead of smothering the seabed with heavy bitumen.
Art Sterritt, executive director of Coastal First Nations, said that announcing the refinery plan before consulting with First Nations “seems more like a PR stunt to build support for the pipeline than a real commitment to the First Nations, the communities and the environment.”
Others see issues Eric Nuttall, energy portfolio manager with Sprott Asset Management, said he doubted that Northern Gateway will get built in any event.
Michael Tims, chairman of Calgary-based investment dealer Peters & Co., said that even before Black surfaced with his scheme industry chief executive officers and government leaders had said there was no economic case for building a refinery on the remote British Columbia coast.
Randy Ollenberger, an analyst with BMO Nesbitt Burns, said “it does make a lot of sense to build a refinery in Canada to ship clean products, (but) the Chinese would likely prefer to buy raw bitumen as they are building their own refineries to process heavy oil.”
Peter Boag, president of the Canadian Petroleum Products Institute, which represents refiners, said the proposal is interesting from both a regulatory and economic perspective, “but there are a lot of hurdles to be overcome.”
| 