By Geoffrey Morgan, November 16, 2015
Forget tankers and pipelines, David Black has a plan for a ‘West Coast exit’ for Canada’s oil
Canadian PressDavid Black believes that given the recent government moves dimming the prospects of the Keystone XL and Northern Gateway pipelines his proposed refinery is the best option for Albertan oil exports.
CALGARY – David Black’s plan to build a $22-billion refinery on the coast of British Columbia has long been derided as a pipe dream. But Black believes that given the recent government moves affecting the Keystone XL and Northern Gateway pipelines his proposed refinery is the best option for Albertan oil exports.
Moreover, Black said in an interview he won’t need a pipeline to build and operate his proposed 550,000 barrel-per-day Kitimat Clean refinery on the north coast of B.C., for which he expects to file applications for federal and provincial regulatory approvals by Christmas.
“You’re going to have to focus on what it takes to get a West Coast exit for your oil, and God knows a West Coast exit is far more lucrative than a southern or an eastern exit,” said Black, the owner of Kitimat Clean Ltd. and the Black Press Group Ltd. newspaper chain.
Major oilsands producers have been unwilling to sign contracts with Kitimat Clean because, Black said, their executives didn’t know if the project would ever be built. And Kitimat Clean hasn’t been able to get financing without signed contracts with major oilsands producers.
Producers have had their hopes of new export pipelines dashed in the past two weeks, but Black said he was hopeful they will now take another look at his refinery proposal.
On Nov. 13, U.S. President Barack Obama rejected TransCanada Corp.’s application to build the Keystone XL pipeline after years of regulatory delays. A week later, Prime Minister Justin Trudeau said he would follow through on an election promise by asking Transportation Minister Marc Garneau to “formalize a moratorium on crude oil tanker traffic on British Columbia’s North Coast.”
Analysts have said a moratorium would hurt Enbridge Inc.’s plan to build the $7.9-billion Northern Gateway project between the Edmonton area and an export terminal at Kitimat, B.C. An Enbridge spokesperson said it is committed to the project despite the moratorium.
Black hasn’t met with the new federal government yet, but said Kitimat Clean would be unaffected by such a moratorium. “I don’t think that particular decision implies any problem with refined fuels,” Black said.
He added the Kitimat Clean proposal has been reconfigured in the past six months so that it is no longer dependent on a connecting pipeline. “I’ve gone to a place I never thought I would go: I started thinking about shipping it by rail,” Black said.
Canadian National Railway Co. has rail lines connecting Fort McMurray, Alta. and Kitimat.
“I’ve been talking to CN (Rail) and terminal operators in Alberta about how we ship 100 per cent bitumen,” Black said.
Oilsands bitumen needs to be cut with diluent, which turns the mixture into slurry, in order to travel through a pipeline. Black said that by using railway cars he could eliminate the need for costly diluent, potentially allowing producers to ship more bitumen to his proposed refinery without a pipeline.
“I think it might be a better way than the pipeline,” Black said, referring to potential spills and safety issues.
Unlike crude oil from southern Saskatchewan and North Dakota, oilsands bitumen (without diluent) has a low flash point and is unlikely to explode in the case of a train derailment.
“It makes all the difference in the world because you’re basically shipping something that’s fairly solid and then what you have to do is heat it up again at the other end,” Black said.
If he is able to attract the support of the Calgary oil patch and financing for the project, which he describes as the most environmentally friendly refinery in the world, Kitimat Clean could be operational in eight years.
It would take two years to go through the regulatory process, followed by six years of construction and, Black said, could operate without a pipeline.
KITIMAT CLEAN LTD. PRESS RELEASE
December 4, 2014
We are pleased to announce that Hatch Ltd, a Canadian based worldwide engineering firm, has completed its seven month design and feasibility study for the Kitimat Clean Ltd heavy oil refinery. The report, consisting of some 270 pages, provides for a robust design which will enable the refinery to process 550,000 barrels per day of diluted bitumen from Alberta into 460,000 barrels of refined fuels. With a capital cost estimated to be $22 billion the refinery will be one of the ten biggest in the world and we believe the largest single project ever constructed in Canada.
The plant will employ approximately 3,000 operations people, at an estimated payroll of $300 million dollars. Most likely a further 3,000 direct jobs will be created in nearby petrochemical plants. These new manufacturing jobs will go a long way to mitigate the ongoing loss of employment in BC’s resource industries.
All levels of government will welcome the annual tax revenue from the refinery of approximately one billion dollars. The business plan is sound because the refinery will be the lowest cost producer in the whole of the Pacific basin.
As requested by Kitimat Clean, Hatch has configured the greenest heavy oil refinery in the world. CO2 emissions are expected to be in the order of 10 million tons per year which is one-third of the 33 million tons generated by a normal heavy oil refinery producing and burning coke by-product. There is a price to be paid for this, as the Kitimat refinery will cost $5 billion more than a standard coking refinery. The plant will also incorporate the best pollution control equipment in the world to control all other emissions, there will be no waste water, and power for the refinery will all be generated internally. If this refinery is not built in British Columbia, subject to Canada’s tough environmental regulations, it will be built in Asia and likely utilize standard coking technology with the result that approximately 100 rail cars of coke will be burned daily in the atmosphere.
One of the greatest advantages of this refinery has to do with the sea. All received bitumen will be converted into diesel, jet fuel and gasoline. Since these refined products float on water and evaporate, the consequence of any spill at sea is greatly diminished. A discharge of conventional crude oil or synthetic crude oil, on the other hand, is extremely difficult if not impossible to remediate, as we have learned from the Exxon Valdez disaster. In that case conventional crude oil was spilled. After four years of effort by up to 11,000 people only 7% was recovered. A bitumen spill would be far worse as much of it would sink in coastal waters like ours and not be recoverable, and the remainder would harden up on beaches and mudflats and be impossible to remove safely.
Locating the refinery in the best spot is critical to the economics and the environment. Most of the refined product will be exported and all export refineries are built beside the sea. (It would be uneconomic to locate this refinery in Alberta for example). The advantage of choosing a site near Kitimat and Terrace is that there is no need to transport diluted bitumen by pipeline or rail along the hazardous route beside the Skeena River.
Lenders are willing to put up the money for the refinery but insist on some skin-in-the-game from Canada. Therefore Kitimat Clean is offering compensation to the federal and provincial governments to obtain their debt guarantees. The federal government has stated that it will provide conditional approval given that the refinery is nation-building at its best and the best environmental solution for the planet.
Our next steps include applying for environmental permits, agreeing with the Kitselas and Haisla First Nations on acceptable compensation for the use of their traditional territory, negotiating feedstock contracts with oil and gas producers, negotiating offtake contracts and funding with Asian participants, and completing the last phase of the engineering preconstruction work. All of this work will require two years. Construction will take an additional six years.
President, Kitimat Clean Ltd.
KITIMAT CLEAN TO LICENSE EXPANDER FTCRUDE®TECHNOLOGY FOR NEW BRITISH COLUMBIA REFINERY
Calgary, AB. (June 27, 2014)- Expander Energy is pleased to announce that Kitimat Clean has entered into an agreement with the Company to license its FTCrude® process for its proposed refinery in Kitimat, British Columbia.
Expander’s FTCrude® is a commercially licensable technology that converts low value or waste carbon sources into high value hydrocarbons – SynDiesel®, SynJet® and FTCrude®.
The technology maximizes the retention and subsequent conversion of carbon into synthetic fuels, thereby minimizing carbon rejection. The FTCrude® process exceeds 90% in carbon efficiency by reducing GHG emissions (by over 50%) and eliminating the traditional production of petcoke.
Through the integration of FTCrude® into the Kitimat Clean refinery, GHG emissions will be reduced by 5 million tonnes per year (equivalent to avoiding the emissions of 1.2 million cars), and nearly 5 million tonnes per year (100 train cars per day) of petcoke will be eliminated. Avoiding the petcoke byproduct is important because it contains high volumes of sulphur and heavy metals and would subsequently be burned in Asia.
Kitimat Clean Ltd. is a private British Columbia company created to plan, construct and operate an oil refinery in Kitimat, BC. The refinery will feature state-of-the-art design, specifically for processing Alberta oil sands heavy crude oil, and engineered to be the cleanest upgrading and refining site in the world.
Kitimat Clean is building this oil refinery, an oil pipeline from Alberta to Kitimat, a natural gas pipeline, and a tanker fleet of 11 VLCC vessels. The total cost is estimated to be $32 billion. The refinery will convert Alberta oilsands bitumen, which sinks in salt water laden with sediment and plankton, into gasoline, diesel and jet fuel which float and evaporate in the event of a spill at sea. The refinery will create an estimated 10,000 full time jobs and generate billions of dollars of new tax revenues for governments each year. (Kitimat Clean news release dated June 16, 2014)
In making this announcement Expander Energy CEO James Ross stated, “We are thrilled to have been able to execute this landmark agreement with Kitimat Clean. By incorporating our FTCrude® process into their refinery design, this combined state-of-the-art technology is specifically engineered to convert Alberta bitumen into refined products that will be the world’s cleanest petroleum fuels, eliminating the stigma of “Dirty Oil”.
We firmly believe our FTCrude®technology is critical in ensuring that Alberta bitumen will be refined to the highest standards before it is exported, and provides invaluable environmental and economic benefits for Alberta, British Columbia and Canada.”
Kitimat Clean owner and founder David Black added, “The Expander FTCrude®technology is key to executing our plan and building a state of the art, green refinery. It is vital that we benefit from the GHG and CO2 reductions and high quality finished product that it will provide. Capital costs will be higher but the benefits are enormous. We are extremely pleased to be able to make this announcement.”
About Expander Energy
Expander Energy is a leading developer and licensor of processes to convert carbon sources into valuable synthetic fuels. Our engineered fuels, SynDiesel® and SynJet® are ultra-clean burning and complement existing transportation fuel infrastructure and current engine technologies. Our patented and patent pending technologies increase refinery yield, reduce GHG emissions, and are designed to convert carbon rich materials such as natural gas, biomass, bitumen residuals, petcoke and municipal solid waste. We strive to deliver an alternative, drop in fuel through patented technology to provide economic growth for Alberta and Canada while being environmentally conscious. Expander Energy Inc. is a privately held energy company located in Calgary, Alberta, Canada.
Suite 200, 1414 – 8th Street S.W.
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June 10, 2014 – Kitimat Clean Ltd. announced today that it has signed a contract for the basic engineering design of a state-of-the-art world scale oil refinery to be located at Kitimat BC. Hatch’s Calgary office will do the work over the next five months. Once the design is finished Hatch will provide an estimate of capital costs which will be used by Kitimat Clean to sign contracts with lenders.
Kitimat Clean is building an oil refinery, an oil pipeline from Alberta to Kitimat, a natural gas pipeline, and a tanker fleet of 11 VLCC vessels. The total cost is estimated to be $32 billion. The refinery will convert Alberta oilsands bitumen, which sinks in salt water laden with sediment and plankton, into gasoline , diesel and jet fuel which float and evaporate in the event of a spill at sea. The refinery will create an estimated 10,000 full time jobs and generate billions of dollars of new tax revenues for governments each year. In addition the refinery will use new Canadian technology, at an incremental cost of $3 billion, to cut greenhouse gas emissions by 50%, or 5 million tonnes per year. More information is available at kitimatclean.ca
Hatch Ltd. has served clients around the world for over six decades and has project experience in more than 150 countries. With over 11,000 people in over 65 offices, the firm has more than $35 billion in projects currently under management.
David Black, the owner of Kitimat Clean, said the entire Front End Engineering Design (FEED) study will eventually cost over $100 million and require more than two years to complete. He expects to apply for and obtain environmental permits during the same time frame. With these completed, contracts with lenders, gas and oil suppliers, and refined fuel users in place, and with agreements confirmed with governments and First Nations, construction could begin in approximately three years. Construction will require another five years at a minimum.
Sanjiv Save, Hatch Global Director of Gas Monetization and Hydrocarbon Processing, said Hatch is excited by the opportunity to design one of the world’s largest refineries and the greenest refinery ever planned. The introduction of Fischer Tropsch technology to a heavy oil refinery for the first time will cut CO2 emissions by 50% and sidestep the normal production of 100 train cars a day of petroleum coke.
Kitimat Clean Ltd.
Global Director Gas &Hydrocarbons