A $25 billion plan to build a refinery in Kitimat to ship value-added Canadian oil to Asian markets is viable, B.C. Energy Minister Rich Coleman said Tuesday citing a new report.
The provincial government released a demand analysis it commissioned by consulting firm Navigant. The report recommended serious consideration of the plan put forward by media mogul David Black.
"The report tells us that a project like this is viable," Coleman said. "It tells us what they're proposing would be workable."
Black and his associates have proposed building their own pipeline from Alberta to Kitimat as well as a refinery and tanker terminal. The total price tag has been estimated at $25 billion, although the Navigant report said the $13 billion set aside for the refinery itself could be on the high side.
Black has said the refinery would create about 3,000 permanent jobs as well as upwards of 6,000 during construction. It's being proposed as an alternative to shipping raw oil sands products to Asian refineries.
"Such a refinery would provide incremental long term economic benefits to the region, compared to export of unfinished feedstock," the report said. "In addition and equally importantly, if configured carefully and managed properly, the refinery would generate sustainable margins that otherwise would be lost to Asian purchasers of Canada's oil sands production."
Prince George-Valemount NDP candidate Sherry Ogasawara said tbe report was done too early in the process because Black has yet to submit a formal proposal. She suggested the Liberals want to make the refinery an election issue even though it's at least eight years away from becoming operational.
"They really haven't nailed down all the details. It's quite speculative," she said. "To me, it's attempting to ignite an election issue rather than focusing on governing the province."
Ogasawara called the refinery plan "interesting" and said the NDP are willing to explore the idea in more detail in the future.
The refinery would still need to have diluted bitumen shipped via pipeline through northern B.C., just like the Northern Gateway project proposes to do. The NDP are against that project and Ogasawara said it's too early to tell if they could be supportive of Black's pipeline plan.
"I think that's a really hard thing to say yes or no to at this point," she said, noting an NDP government would bring in a made-in-B.C. environmental review for heavy oil pipelines. "We'd have to subject it to those rigours and it has to hold up to those scientific standards."
The Northern Gateway project has faced stiff opposition from First Nations and environmental groups and Coleman said it would be up to Black and his partners to navigate those political waters. He's buoyed by assurances from the proponents that they are willing to work with communities along their proposed pipeline route.
"I think it will come down to whether they can get that relationship on the ground," Coleman said. "That's a big part of it and they do know that's one of their challenges."
In addition to the economic benefits of adding value in Canada, Coleman also pointed to the environmental advantages. He said the consequences of a marine spill would be less severe as refined products will evaporate compared to raw oil which would need to be removed. Coleman also said large supertankers would no longer be required.
"You can send the same amount of product in smaller ships," he said.
Ogasawara countered that smaller ships could mean more ships, which isn't necessarily a good thing.
"While smaller vessels sound good, more of them? We have to look at whether there is capacity along that coast."