Kitimat refinery plan honed

But multi-billion project financing still outstanding as is environmental approval

  • Tue Dec 16th, 2014 5:00pm
  • News

By Cameron Orr

With a design and feasibility study in tow, Kitimat Clean president David Black now needs to secure government support to make further in-roads in his plan to build an oil refinery north of Terrace area.

Black, who is the chairman of Black Press, which owns, among others, The Terrace Standard, announced this month that Hatch Ltd. had completed the study for him, which sets out how the proposed refinery would process 550,000 barrels of diluted bitumen a day in to 460,000 barrels of day of refined fuel—gasoline, diesel, and jet fuel—for export overseas.

In a press release, Black said that lenders are willing to put up money for the refinery which would cost an estimated $22 billion but are insisting on “skin-in-the-game” from the federal government.

Black has been seeking debt guarantees from the federal government, and said he is offering compensation to the federal and provincial governments to obtain them.

Black declined to comment on further details on what “compensation” looks like in this context, although he did say “it’s substantial.”

That said, he says he does have conditional support for debt guarantees from the federal finance minister Joe Oliver.

Reached for comment to confirm, the federal finance department says it does not comment or speculate on possible actions.

Skeena-Bulkley Valley NDP MP Nathan Cullen, who is also his party’s finance critic, said he’s spoken to people on the issue and said that the reception he’s seen has been lukewarm.

“The loan guarantees did not seem to be something they were enthusiastic about,” he said.

Cullen said Black has struggled in getting Canadian backers, from the supply side to the financial side, and it would never get built if he can’t get producers on board.

That said the question of value-added remains important, he said, and the public could be more inclined to pipelines if benefit came back to the people.

Black admits that finances are where he has to put his efforts at the moment.

“I really think I have to tie down more money here,” he said. “I’ve got to focus on who’s going to provide the money.”

He said with this study now done, he really needs the government “to tell me whether they’re coming to the party or not.”

With an estimated 3,000 person workforce for the refinery, Black said Hatch’s report puts directly-employed jobs at up to 1,500, while another 1,500 would work at the refinery on a contract basis.

He cites potential for up to 3,000 other jobs with possible petrochemical plants that could open up in conjunction with the refinery. He points out that large volumes of sulphur extracted during the refining process could be used to supply a fertilizer plant, for instance.

He said he didn’t know exactly what the particular emissions estimates would be but that carbon dioxide emissions would be about one-third of a normal heavy oil refinery, and would be about 10 million tonnes per year.

Black said it has been awhile since he has spoken with the Haisla or Kitselas about the project, who he specifically names as governments he’ll have to work out economic benefit deals with, but he said he has felt positive based on early conversations with them.

Black also needs to purchase the land on which his refinery would sit from the provincial government.

And he will need to go through an extensive federal and provincial environmental review.

Absent from his release was how he’d get crude oil from Alberta to his refinery.

He said he hasn’t focused on that question recently, but is still hoping for a pipeline, but has not ruled out rail.

“CN wants to do it, that’s for sure,” he said.

Cameron Orr is the editor of The Northern Sentinel in Kitimat