Jobs, economic benefits could tilt Christy Clark to support Northern Gateway
By Markham Hislop
The Northern Gateway plot line just took another twist, as a BC businessman proposes to build a heavy oil refinery at Kitimat.
David Black is the owner of Black Press, which owns a number of weekly newspapers in BC and Alberta, Alberta daily the Red Deer Advocate, American dailies the Akron Beacon Journal and the Honolulu Star-Advertiser, newspapers in Washington state, and trade journals. By my count there are well over 100 papers in the Black stable, which justifies the BC media’s description of him as a tycoon.
Like many tycoons, Black has a wandering eye and thinks his business acumen is transferrable across industries. In this case, from newspapers to oil refining.
Black and partner Glenn McGinnis, who is described in the company’s press release as a consulting engineer with experience in “all aspects of the oil refining business for 40 years,” have started a company called Kitimat Clean Ltd. KCL is being designed to process all of the 525,000 barrels a day of Alberta oil sands bitumen transported by the proposed Northern Gateway pipeline, which will terminate at Kitimat, located 1,412 kilometres northwest of Vancouver if one travels by road.
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Building more Canadian refineries is a bloody good idea, as I pointed out in a column three weeks ago. I argued then that the Stephen Harper Government should force Chinese state-owned CNOOC to build a large refinery as a condition of its $15 billion purchase of Nexen Inc. Beacon News columnist Bruce Stewart also notes that only a few years ago Harper was championing as many as 14 new refineries and upgraders, but has since gone silent on the issue.
Texas Gulf Coast refineries currently turn Alberta oil sands dilbit into gasoline, aviation fuel and diesel, and export it. Why can’t Canada?
The Vancouver Port currently exports more than 2 million metric tonnes of petroleum products (including the aforementioned gasoline, etc.) annually. The product is refined near Edmonton and transported to the coast through Kinder Morgan’s Trans Mountain pipeline.
So there’s the Canadian precedent. We know how to refine it, we know how to ship the refined products by pipeline, and we already have exports markets.
Sounds like Black’s plan should work, doesn’t it?
Not so fast.
The proposal to build the $13 billion refinery near Kitimat doesn’t address critics’ major objection: the danger to the BC interior’s fragile ecosystem posed by pipeline leaks. Dilbit is apparently heavier than light crude or refined products, which means it will sink in water, making it much tougher to clean up if there is a spill.
And opponents of Northern Gateway have never liked the choice of Kitimat as a port, arguing that the inlet is just too treacherous for oil tankers to safely navigate.
As if that weren’t enough objections, the idea of more oil tankers off the coast has many British Columbians, including Vancouver Mayor Gregor Robertson, upset.
But there is an upside to Black’s plan that will appeal to Premier Christy Clark: more revenue for the BC government. Black’s press release doesn’t detail how much more tax money a refinery might generate for the cash-strapped Liberals, except to say it would be in the “hundreds of millions of dollars.”
Black suggests construction will create 5,000 jobs and 3,000 permanent jobs, plus thousands of indirect jobs. Presumably plenty of local businesses would benefit, as well. All of which means more taxes for Victoria.
Only a month ago Clark laid out a five conditions for possible BC approval of a heavy oil pipeline, one of which was more fiscal and economic benefits for the province. Black’s proposal certainly meets that test.
In a perfect world, the refineries should be built in Alberta, with refined products only shipped through Northern Gateway. But that doesn’t meet Clark’s requirement for more benefits for BC. Perhaps a community closer to BC’s northeastern border would be more suitable?
Expect to hear a lot more about Kitimat Clean in the coming months. Black says he is serious about the project and the company is preparing an Environmental Assessment Application for the province in the very near future. Opponents will be quick to dismiss the proposal as too little, too late, but expect it to have support from industry and Ottawa.
That will put Kitimat Clean on the table as a serious player just at the time pipeline proponents need some good news.
As Enbridge Inc. and producers gird for the coming Northern Gateway battle with environmentalists and the BC NDP this winter, Kitimat Clean could be the wild card that helps tip the balance.