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Business tycoon David Black battles on in B.C. Newspaper owner sees no reason British Columbia refinery plan will get derailed, says it meets environmental, economic goals GARY PARK For Petroleum News
Canadian newspaper owner David Black is now embarking on a fifth year of defying the odds with his plans for a 400,000 barrels per day crude bitumen refinery on the British Columbia coast near Kitimat.
Having submitted a 129-page comprehensive description of the US$22 billion Kitimat Clean project to federal and provincial regulators, launching environmental assessments, he now figures approvals are possible within three years.
“Frankly, I don’t see what is going to derail it,” he said in speech and media interviews earlier in April.
He said the project is consistent with the environmental and economic objectives of British Columbians by removing the risk of raw bitumen spilling into the Pacific Ocean, while reducing carbon dioxide emissions by two-thirds.
In addition, despite the absence of unqualified endorsements, the plan has yet to draw opposition from First Nations.
The project filings now set in motion public comment periods, contract signings and permit applications.
Topping the list of agreements he needs, Black said the Haisla Nation, which has already entered tentative partnership arrangements with LNG proponents and which controls land where the refinery would be located.
He said the one thing Kitimat Clean has learned in British Columbia “is that you can do nothing unless you have First Nations (on your side).”
Black said that gaining that support would include signed contracts for business and other economic opportunities arising from project construction and on-going operations.
Detailed engineering work The engineering firm of Hatch put “its best people” on the project description and will now undertake over the next 30 months the detailed engineering work needed to establish more complete project costs.
Black is also continuing to make his case to governments at all levels for a project he estimates will generate C$1 billion in annual tax revenues, create 1,250 direct jobs, 1,250 contract jobs and thousands of indirect employment through the region.
He also forecasts that construction would last five years and employ 7,000 workers.
The objective is to convert 400,000 bpd of bitumen into diesel, jet fuel and gasoline to be exported to Asia on tankers leaving the terminal every four days.
But Black continues to attract questions about the level of commercial backing for the venture, having so far failed to attract large multinational energy companies, which have traditionally insisted on controlling their own value-added refinery operations.
Two unit trains per day In an effort to sidestep one of the most formidable barriers to moving bitumen from the Alberta oil sands to the British Columbia coast, Black plans to deliver the raw product by two unit trains per day to the refinery.
Converting the bitumen into byproducts would also overcome a commitment by the new Canadian government to ban tankers carrying raw bitumen from operating in northern British Columbia waters.
“Of all the ways to get the oil to market, this is by far the best,” he told the Financial Post. “I have done the math and if the industry pays all the transportation costs and pays me the toll they will make a lot more money” than they do by shipping bitumen from central Alberta by pipeline to the United States.
On the financing front, Black lives in hopes that the administration of Prime Minister Justin Trudeau would agree to C$10 billion in loan guarantees, matching a similar offer by the previous federal government until it was defeated last October.
The rest would come from banks in China and Canada and possibly even sovereign wealth funds in the Middle East, he said.
Rival proposals Other pitfalls on Black’s path to success involve two rival proposals.
Vancouver-based Pacific Future Energy has also submitted an application to federal and provincial regulators to build a plant to convert 200,000 bpd of bitumen into fuels.
The US$11 billion venture has no plans to seek federal or provincial financing, but, like Kitimat Clean, is underpinned by rail shipments of bitumen, also to its refinery and tanker terminal near Kitimat.
In addition, Eagle Spirit Energy, a First Nations enterprise, hopes to convert 1 million bpd of bitumen in Alberta for rail transportation to a terminal on the British Columbia coast.
Also lurking behind the curtains is a tentative idea to invest up to C$34 billion to build a resource railway for stranded bitumen and natural gas from Alberta to the Port of Valdez, which some Canadian First Nations have indicated they would join as equity partners.
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