The concept of a Kitimat bitumen refinery may have reasons to exist at this moment but none are connected to serious business objectives. Accordingly, David Black’s proposition, which if built would rank among the world’s largest refineries, has been received with what Gary Mason called a rush of cynicism and doubt.
Last month, Black indicated $25 B financing was arranged through the Oppenheimer Investments Group, a company unknown to the public. This week, Black announced that Oppenheimer is out and the Industrial and Commercial Bank of China (ICBC) will try to organize lenders for the project.
David Black appears to lack technical and managerial experience for a huge industrial project and he does not have the financial muscle. (Torstar carries their 20% interest in Black Press at zero value.) Despite that, CP quoted Premier Clark, “Black driving the development, ensures the project is BC owned.” Perhaps Ms. Clark expects bcIMC will find investors for the project in BC.
Its promoter claims Kitimat Clean would process 525,000 barrels per day, making it larger than any refinery constructed on this continent in four decades. North America’s last significant refinery project, a facility in Garyville LA, began operating in 1977 at capacity of 200,000 bpd and is now rated at 460,000 bpd.
|Source: U.S. Energy Information Administration|
I surmise the project is a Hail-Mary effort to boost Liberal chances in the May election. Liberals lay claim to being a business friendly government and they hope the proposal promotes the Liberals’ fantastical promise of a debt free British Columbia. Premier Clark announced that “Kitimat Clean refinery royalty revenues” will be captured by her new Prosperity Fund. Since the Dilbit feedstock would be extracted in Alberta, perhaps Clark is expecting a royalty sharing agreement with Premier Redford.
The second value of Black’s refinery proposition is to lessen opposition to the Northern Gateway pipelines. Refining in Kitimat is promoted as a way of exporting petroleum products without the risks associated with water transport of diluted bitumen. However, beginning construction of the pipelines provides no guarantee the refinery will get built. Difficulties in financing a Canadian refinery can be claimed to justify shipping Dilbit to Asia.
Enbridge first disclosed its plans to transport bitumen to BC’s north coast in 2003. After more than a decade of consideration, the company still faces obstacles that delay the start of construction. Kitimat Clean has not completed comprehensive environmental studies for their massive proposal. Unless Canada’s Conservative Government totally abdicates environment reviews, 67-year-old Mr. Black has a long road to travel.
However, I don’t think it is a road he intends to travel. The scheme is almost certainly an act of theatre from the same Liberals who brought us the Concerned Citizens for BC and its deceitful attacks on Opposition Leader Adrian Dix.