David Black's incredible plan to build a $13-billion refinery in Kitimat to process all of the oilsands crude from the Northern Gateway Pipeline is audacious, insane and tantalizing, all at the same time.
The scale of the Kitimat Clean proposal (see page 17 for all of the details) is enormous, a much larger project than the pipeline itself. The audacity of the plan isn't so much its size, however, as the financial risk.
There hasn't been a refinery built in B.C. since Husky opened its doors in Prince George 45 years ago. The $5-billion upgrader refinery currently being built near Edmonton is the first refinery built in Canada in more than 30 years. The cost and the length of time needed to build a refinery has discouraged investors from taking the plunge. Instead, Canadian refineries have expanded their capacity, although their overall output continues to fall, to the point where Canada refines only about a quarter of the crude oil it produces.
The rest goes down south.
The Kitimat Clean plan would be positioned to not only refine crude from the Alberta oil sands, but it could conceivably refine oil from the Beaufort Sea in Canada's Arctic (once the Mackenzie pipeline would finally be built) and Alaska's North Slope (there are some legal impediments in the way of that right now but things change when billions of dollars are involved).
In other words, this refinery could outlive everyone who worked to build it, much like Chevron's refinery in Burnaby, which opened in 1935.
One person's audacity, however, is another person's insanity.
There are crazy parts to this plan.
Even if everything happened perfectly and construction started in two years, it still wouldn't open until 2020, three years after Enbridge hopes to begin moving crude through Northern B.C. to Kitimat.
What happens in those three years? Who knows?
And that's making the enormous presumption that the Joint Review Panel endorses the pipeline proposal and the federal government backs that recommendation.
Still, Kitimat Clean is tantalizing because it comes with much less uncertainty and addresses numerous concerns about the pipeline proposal.
The refinery would take crude oil and convert it into diesel, gasoline and kerosene. Spilling crude oil, particularly into a large body of water, is a major problem because of the crude's toxicity, the difficulty in collecting it all and the long-term effects on the environment. Spilling the same amount of diesel, gas or kerosene would still be harmful but nowhere near as detrimental to the environment in either the short or long term.
In other words, the refinery reduces the risk of massive damage to the coast in event of a large spill. Furthermore, processing the crude in B.C. to strict environmental standards is better for the whole world in the long run than having it refined to much lower standards somewhere else.
Black's proposal also addresses Premier Christy Clark's desire for B.C. to gain further financial benefits from the pipeline. By processing Alberta's oilsands crude for export to Asia, B.C. would position itself as a major player in the global refinery business and foster long-term economic growth and employment stability across the region. Furthermore, Kitimat Clean gives northern communities and area First Nations another way to plug into the overall project and benefit from it.
There's still that issue of the pipeline itself running across the province but having a refinery waiting to process the crude in Kitimat reframes the debate significantly.
Regardless of whether Kitimat Clean ever sees the light of day, Black's plan is a bold suggestion to turn a problem into an opportunity, rather than just opposing the pipeline without offering alternatives.
-- Managing editor Neil Godbout
