|
No quit in BC refinery plans Proponents take steps toward building Pacific Coast facilities to upgrade oil sands bitumen for export; road ahead remains tough Gary Park For Petroleum News
There are two rock-solid believers that upgraders can be built on the British Columbia coast to turn Alberta oil sands bitumen into synthetic crude for export to Asia-Pacific markets.
And, regardless of a chorus from skeptics and cynics drawn from First Nations, the environmental movement, industry leaders and analysts and governments, they refuse to abandon their hopes of building facilities at a combined capital outlay of C$43 billion.
Widely spurned from the outset, newspaper publishing magnate David Black has advanced his vision for Kitimat Clean by completing a seven-month design and feasibility study for what is described as an environmentally friendly refinery.
Separately, Pacific Future Energy, a venture backed by Grupo Salinas, a Mexican industrial conglomerate, has rounded up some high-profile names in the aboriginal community and a former senior cabinet minister in the Canadian and Alberta governments to fill advisory roles for a project that carries an estimated price tag of C$10 billion for a first phase to process 200,000 barrels per day of bitumen.
Study for Kitimat David Black, who owns 170 newspapers across North America, said the 270-page study by Hatch, a Canadian-based global engineering firm, provides the necessary details required by prospective investors to launch plans for a facility at Kitimat to convert 550,000 barrels per day of crude bitumen into 460,000 bpd of refined fuel.
Black said he will now continue his search for a partner, likely outside Canada, and his attempt to win over the Canadian government to provide C$10 billion in loan guarantees.
Kitimat Clean said unnamed lenders are willing to put up the money for the refinery, provided the Canadian government puts “some skin in the game.”
The company said the government will provide conditional approval for the project, which it views as a nation-building venture as well as an answer to environmental concerns.
Next steps The next steps involve a formidable list extending over two years, including applying for environmental permits, agreeing with the Kitselas and Haisla First Nations on acceptable compensation for the use of traditional territory, buying land for the proposed site from the British Columbia government, negotiating offtake contracts and funding from Asian participants and completing the last phase of the engineering preconstruction work.
The current cost breakdown includes C$22 billion for the refinery, C$8 billion for a pipeline from Alberta and C$3 billion on other infrastructure and a tanker fleet.
Black is making his case on overcoming opposition from First Nations to increased tanker traffic carrying bitumen, either raw or diluted, in British Columbia’s coastal waters.
He said that refining the heavy crude into gasoline or diesel before shipping would reduce the dangers of an environmental disaster and provide an important source of revenue for the British Columbia government.
Completion in 2022 If Black is able to clear all of the obstacles, he hopes the refinery could come on stream in 2022, two years later than his initial goal.
The Hatch study said the plant would employ 3,000 operations people and provide an estimated annual payroll of C$300 million. A further 3,000 direct jobs could be created in nearby petrochemical plants.
“The business plan is sound because the refinery will be the lowest cost producer in the whole of the Pacific basin,” Kitimat Clean said.
The company said carbon dioxide emissions would be about 10 million metric tons per year, one-third of the 33 million metric tons generated by a normal heavy oil refinery producing and burning coke by-product.
But attaining those goals would raise the cost of the Kitimat refinery by C$5 billion over the standard coking refinery, Kitimat Clean conceded.
But the study said the plant would incorporate the best pollution control equipment in the world to control all other emissions, while there would be no waste water and power for the refinery would be generated internally.
Former chiefs recruited Pacific Future Energy has made strong advances in luring First Nations to play a role in its refinery plan by recruiting two former grand chiefs of Canada’s Assembly of First Nations - Shawn Atleo and Ovide Mercredi - to help launch the venture.
Atleo has been named as senior advisor of partnerships for the project, while Mercredi has been named to the company’s advisory board.
“First Nations’ values and principles will shape this long-term vision and the potential for a new, more sustainable energy industry for all British Columbians and Canadians,” Atleo said in a statement.
Mercredi said there is a “great need for a new approach that recognizes traditional lands and territories and a third order of government.”
Stockwell Day, a former federal international trade minister and former Alberta finance minister, joined Pacific Future Energy in August as a special advisor.
In a speech to the Vancouver Board of Trade on Dec. 10, he said the fact that First Nations have been some of the most vocal opponents of shipping raw bitumen off the British Columbia coast “does not mean they are necessarily against economic development. It simply means that they care deeply about our coast and that their rights must be respected.”
British Columbia Deputy Premier Rich Coleman, who holds the cabinet post for natural gas development, said his government is continuing to adopt a wait-and-see attitude towards the refinery plans.
He said both companies are making the right moves, which merits taking the proposals seriously, even though it is about 30 years since Canada opened a major new refinery.
| 