A PLANNED (US) $11 billion oil refinery between Terrace and Kitimat doesn’t include an export terminal or the pipelines to take the finished product from the facility to the terminal.
And refinery builder Pacific Future Energy has not yet found a partner to build either the pipelines, one to carry gas and the other diesel, or the terminal, says company official Don MacLachlan.
“The pipeline and terminal are not part of our project,” said Don MacLachlan last week.
Pacific Future Energy two weeks ago released its project plan to produce gasoline, diesel, jet fuel and butane and submitted it to government regulators.
It would refine crude oil shipped to it in railcars, as many as three or four trains a day of 120 cars each, from the Alberta oil sands which is considered a safe alternative to shipping the product via a pipeline.
But instead of shipping the refined product on tankers from Kitimat via the Douglas Channel to the ocean, the company has marked out the Portland Inlet, 120 kilometres to the north, as a possible location for an export terminal.
The two pipelines would have to cross the Skeena River in some fashion to reach the inlet.
Pacific Future Energy, in its project proposal says the Portland Inlet location, approximately 60 kilometres north of Prince Rupert on the north coast, comes from what it calls “early third-party studies” but has yet to release those studies or provide further details.
Such an arrangement, where refineries don’t own the facilities carrying the final product onward, is similar to how other refineries work, says the vice president of the Canadian Fuels Association.
“As an example in Edmonton, there are three refineries there and each of them is connected to pipelines that transport the product all the way to Vancouver or south to Calgary or east all the way to Winnipeg, but in all cases, those pipelines are owned independently of refineries and in each case it’s a little different [in terms of the ownership structure],” said Brian Ahearn.
In one such scenario, the pipeline owner charges a toll to the refinery for the amount of petroleum that’s shipped.
Petroleum engineering professor Pedro Almao from the University of Calgary said the type of setup described in the Pacific Future Energy proposal is uncommon, though not unheard of for a coastal refinery.
“Most commonly the refinery is built close to the port which is more optimal for consumables of the refinery and for disposal,” he said.
The reaction to the refinery plan has been mixed in the Terrace community, with at least one potentially implicated First Nation saying it doesn’t like the way the refinery plan has rolled out so far.
Kitsumkalum chief councillor Don Roberts says he’s unhappy with the way the Pacific Energy Future Corporation went about introducing the plan, that the company went public before he had a chance to respond to the project.
“We are annoyed at having our name as a consultation band,” said Roberts. “Kitsumkalum is not in support of raw bitumen moving by pipeline or train, or something of that nature.”
He added that he received the project description not long ago and feels it was “a short period” in which to respond.
“I don’t want to go there,” said Roberts about the prospect of pipelines crossing the Skeena River in some fashion west of Terrace which is within Kitsumkalum traditional territory.
He said he feels the Kitsumkalum are “stuck in the middle”, finding the typical way project proponents deal with First Nations – speaking to them individually and offering money to one but perhaps not another – in what he calls a “divide and conquer” strategy.
“My views here is it involves everyone in the Tsimshian Nation,” said Roberts.
Kitselas First Nation chief councillor Joe Bevan said last week Pacific Future Energy also contacted the Kitselas about its project, adding it would take at least another year for the First Nation to evaluate the proposal.
Pacific Future Energy’s proposed refinery is within Kitselas traditional territory.
From the governmental perspective, provincial MLA for Skeena, Robin Austin, said that in fact he thinks that Pacific Future Energy has come out of the gate very well compared to other companies keen on introducing a petroleum export concept to the northwest.
“Front and foremost, they are going about it in the right way in the sense that they recognize that right from the outset, that without the prior consent all of the people, all of the First Nations, this is a non-starter. You see what happened with Northern Gateway. Even the [provincial] Liberal government has come out against the expansion of the Kinder Morgan pipeline.”
From an environmental perspective, SkeenaWild Conservation Trust executive director Greg Knox said the idea of one or more pipelines crossing the Skeena River, as well as the atmospheric disturbances in the Kitimat Valley caused by a large oil refinery, are a worry, but he doubts coastal refinery projects makes sense economically.
Knox said that while it’s true that refined products such as gas and diesel evaporate rather than sink like raw bitumen in the case of a leak, spilled gas would will mix in the turbulence of the water column and be lethal to young salmon.
“Because the turbulence in the water is mixed, some of the materials will evaporate relatively quickly but have an immediate impact,” said Knox.
Still, Knox said concentrating on Pacific Energy Future isn’t a priority for SkeenaWild given the world-wide glut of petroleum products.
“All of the economic analysts are predicting the low oil price is here to stay for a long time, and we just saw sanctions being lifted with Iran, and therefore it makes it easier for Iran to add to world production now,” said Knox.
“There are so many energy, natural gas and oil proposals out there that we try to figure out which ones are most likely to proceed and which ones bring the biggest threats and put our energy there,” he added.
SkeenaWild is a main participant in the Salmon Nation summit this weekend in Prince Rupert, drawing attention to the Pacific NorthWest LNG project on Lelu Island which critics say could pose to Skeena salmon stocks.