Q & A

Answers provided by David Black.

Why not build an Upgrader rather than a Refinery?

Upgraders convert bitumen to synthetic crude oil (SCO).  Upgraders were built in Alberta when the oilsands were first developed because no North American refinery could handle bitumen.  They were the least expensive method of getting bitumen into existing refineries and to market as refined fuels.  It is not economic, however, to build an upgrader in one location and a refinery in another.  Much of the capital cost and the annual operating cost is duplicated.  It is far more efficient to build one upgrading refinery at tidewater.

SCO is similar in density and viscosity to conventional crude oil.  In fact SCO is very like the oil that did such damage when spilled from the Exxon Valdez in Alaska in 1989.  SCO and conventional oil are far more difficult to clean up if spilled at sea than refined fuels like gasoline and diesel which evaporate.  Diluted bitumen (dilbit) is even worse because it tends to sink in water that has sediment or plankton in it, as our coast has.  We have no technology to recover it once it has sunk.  Dilbit also sets up hard on beaches and intertidal areas so it cannot be removed easily.

Why not put the refinery closer to the source in Alberta?

Unfortunately it cannot be done economically. Firstly, all refineries are built from modules that are constructed in lower wage areas of the world. The refineries would be prohibitively expensive otherwise. Modules transported inland to Alberta would be limited to container-sized loads so they could be transported on trains and trucks. A tidewater location like Kitimat’s allows for the use of huge modules that are considerably less expensive. Secondly, the economy in Northern Alberta is overheated. There are already too many jobs and not enough workers. Northwestern BC is the opposite. It needs more construction jobs and permanent jobs. The difference in the cost of constructing a refinery, from these two factors, is several billion dollars.

Also the shipment of refined product from Alberta would be more expensive. Eight liquid products come from the refinery. Sending them consecutively through one pipeline to get to Kitimat would cause substantial waste.

Why not put the refinery in Prince Rupert?

The heavy oil pipeline or railway would have to run along the Skeena River for one hundred kilometers. It would be confined to a narrow relatively unstable corridor shared by a highway and a railway. There could be a risk of a bitumen spill into a major salmon river.

Also a refinery requires a large fairly flat site with road, railway and pipeline access. The one we are proposing covers four square miles. Space like that is hard to find near Prince Rupert.

Is the Douglas Channel a safe corridor for tankers?

Yes. I have sailed up it myself. The narrowest part is two kilometers wide and the whole route is protected from offshore storm waves. It is deep with no obstructing rocks or reefs.

Is it really safe to ship refined fuels in tankers?

BC has experience with this. In 2007 we had a diesel spill in Johnston Strait near Robson Bight. According to the Vancouver Sun the spill covered seven kilometers at one point. It disappeared in two weeks. No remediation was required. Gasoline and kerosene evaporate even more quickly.

Don’t existing refineries have ecological issues?

Many of them do. The advantage of keeping this refinery ‘in our backyard’ is that it must meet Canada’s current tough emission standards. To the extent it displaces other refineries, the planet will benefit.

Why Are You Doing This At This Time?  Why isn’t the Industry?

I have had an interest in this idea for ten years. We proposed the concept to Canada’s oil companies in 2005 when I chaired the BC Progress Board. I proposed it to the industry again three years ago. Since the economic returns from a refinery are less than are available in other branches of the oil business no company has stepped forward to spearhead the project. I have decided to do so myself. I am hoping to serve as a catalyst to attract an industry consortium that will undertake the project. But if no industry player steps forward during the two years of environmental assessment I will do all that I can to organize the capital and build the refinery. I think the pipeline and the refinery are crucially important to our northern communities, to BC, to Alberta and to Canada. We must protect the environment but we must create jobs for the next generation as well. It is our responsibility to do both.

Are you qualified for this?

I am not an expert on oil refineries but I have a degree in Civil Engineering and an MBA.  I have a wealth of practical business experience in strategic planning, negotiating, budgeting, hiring, and working with financial lenders. And I have an acquaintance with many senior business people and politicians in Canada. During my career I have built from the ground up a fairly large and successful publishing company with 150 newspapers in Canada and the US.

Will your newspapers have a conflict of interest?

We have 80 local newspapers in BC. Among them are the papers in Prince Rupert, Terrace, Kitimat, Smithers, Houston, Burns Lake, and Vanderhoof. The editors of the latter group have quite rightly published a lot of information about the pipeline’s possible effects on their communities. I have not been involved in that coverage to date and I have no reason to become involved in the future.

As a proponent of a new refinery I will have a publishing conflict in Kitimat and Terrace. Editorial credibility is important to us. The editors may write about the new refinery proposal as they see fit. I will not tell them what to say in their news stories or in any of their opinion columns.

Where do the Haisla and Kitselas stand on this?

The Wedeene site is wholly or mainly in the traditional territory of the Haisla First Nation. The marine terminal is also in the traditional territory of the Haisla First Nation. We have yet to have serious discussions. We remain hopeful that they, and all other communities along the coast, will agree to the proposal after a full and complete review

What about opposition from First Nations along the pipeline or railway?

We know there are many legitimate concerns about the delivery process. In my view we should not proceed with the delivery of bitumen unless there is confidence that any adverse affects will be immaterial.

How do you know that refined fuels evaporate and heavy crude does not?

This is basic science.  For a better understanding of various fuels and their characteristics in water, go to www.safewater.org. This is one of many independent sources available on the internet.

Are refined oil products not toxic?

Yes they are. The refinery does not solve all environmental issues. If there were a terrible accident involving a tanker carrying gasoline for example, the gas could kill shellfish, seaweed and other organisms encountered in the intertidal zone. It would be very serious. But fish would be little affected and the gas would mostly evaporate in two days. Local heavy rainfall would help rinse the shore off in this part of the world and normal life would come back fairly quickly.

Does a refinery emit greenhouse gases?

Yes it does. In this case CO2 gas will be released in BC rather than in Asia. The effect on the planet would be the same if we were using the same process, but we are not. The Kitimat process will be much cleaner so the Canadian refinery will emit 10 million tons of CO2 per year, whereas an Asian refinery would emit 34 million tons, after subsequently burning the coke produced.   Also the Kitimat refinery will emit less greenhouse gases of other types than other refineries do.

Are there transportation fuels that do not create greenhouse gas?

Not yet. All organic processing releases CO2. For one rather startling example corn ethanol plants actually emit more CO2 than oil or gas plants do. (As another example every human generates one kilogram of CO2 per day simply by breathing in and out.) We need more research to move as quickly as possible to other fuel systems. I am concerned about the environment, just as most British Columbians are. I worry about pollution and the production of greenhouse gases from fossil fuels, just as most Canadians do. In my opinion though, alternate energy and fuel technology are not advanced enough to replace fossil fuels today.

Can we sequester the CO2 or reduce the impact some other way?

Sequestering is not possible given the geology in western BC. The CO2 can be used for a few industrial purposes. For example urea fertilizer is made from CO2 and ammonia. CO2 is also used in fire extinguishers, life jackets, for dry ice and for the fizz in carbonated drinks.

Why develop the oil sands? Pollution will result.

There is a certain demand for petroleum products around the world as people improve their standard of living. Saudi Arabia and other countries would be only too happy to lose Canada as a competitor. Oil will be produced and refined on the planet whether Canada is involved or not. One day we may be able to do away with oil but that day is not here yet. Canada has always exported its resources. In large part it is how we earn a living. In this case I am proposing we “value add” to get more benefit from our resources.

The refinery will be within a few kilometers of homes. How dangerous is it?

Refineries are located in close proximity to cities and towns all over the world. We will fence the facility and maintain a greenbelt around it. Canada’s standards for preventing air borne emissions are very high. They will be met.

How much water is required to run a refinery?

The water requirements for the refinery will be minimized by using a full recovery and recycle design but a fair amount of fresh water is required. We project a need for about 125,000 barrels per day from wells, primarily for evaporative loss makeup. Rainwater will be used where possible.

How much waste water will there be?

There will be no waste water from the plant. It will all be recycled. Clean rain and snowmelt runoff will be discharged at times when the amount of rain exceeds the plant’s requirements.

Some people say that crude oil tanker spills like that of the Exxon Valdez will never occur again because of GPS navigation, double hulls, and mandated requirements for BC pilots and tethered tugs. Do you agree?

I do not agree. As explained below, even with the most sophisticated technology it is not possible to guarantee that tankers will never spill their cargo since human error and unanticipated circumstances can result in disastrous consequences at sea. It is very difficult to clean up conventional oil lost at sea (less than 10% of the medium-light oil from the relatively small Exxon Valdez spill was recovered after 4 years of effort by a workforce of up to 11,000 people), and we have no technology or equipment at all to retrieve any material amount from a dilbit spill (much of the dilbit would sink to the bottom and the rest would harden on beaches and mudflats killing everything in the process). Therefore we should not allow these products in tankers on BC’s coast. Refined fuels, on the other hand, float and evaporate if spilled. The main reason I am building this refinery is to negate the risk of operating crude oil tankers in our waters.

GPS Navigation

GPS navigation is very useful for determining a ship’s position but it will not prevent an accident by itself. The Exxon Valdez knew its exact location because it used Loran C and radar (Loran C was used by all large ships before GPS was invented). It also knew in advance the position of the reef that it hit. The helmsmen just made an error. Similarly the BC ferry, Queen of the North, which had GPS aboard, as well as many other modern navigational aids, went off course and sank because of human error.

Double Hulls

Wikipedia states that “a double hull does not protect against major, high-energy collisions or groundings which cause the majority of oil pollution”. Double hulls can prevent spills if there is a gentle grounding on an even seafloor or a gentle scrape on a reef. However tankers carrying two million barrels of oil have enormous momentum and are not deflected off course by a collision so both hulls will be ripped open if the impact is more than a light brush.

BC Marine Pilots

BC marine pilots no doubt add to a ship’s safety. The Pacific Pilotage Act in 1972 set out modern requirements for local marine pilots on large ships operating in BC. However there have been many accidents in BC coastal waters even though a pilot has been aboard and in charge. The latest occurred in August 2014 when a container ship with a pilot aboard hit a Vancouver pier hard enough to hole the hull. In Prince Rupert in July 2014 a freighter carrying coal went aground with a pilot aboard and holed the hull. In December 2012 a freighter crashed into Westshore Terminals at Roberts Bank with a pilot on board.

Tethered Tugs

In December 2012 the drilling rig, Kulluk, was lost near Kodiak Island Alaska. It was under tow at the time by the 360 foot long Aiviq, a modern ship with four powerful engines. The seas were 20 to 30 feet high, not abnormal for west coast waters. Four more vessels , the 140 foot long Alert, the 140 foot long Nanuq, the 140 foot long Guardsman, and the 282 foot long Coast Guard cutter Alex Haley assisted, and failed to keep Kulluk off the rocks. All the ships were stationed in Alaska and experienced in towing in high winds and heavy seas. Problems ranged from fouled propellers and contaminated fuel on the tow boats to broken shackles on the towline. Kulluk weighed 28,000 tons. Aiviq had experience towing it. A loaded VLCC tanker weighs 360,000 tons. It is also much longer than Kulluk and more affected by ocean currents. The tow boat proposed by the NEB for tethering to the VLCC tankers is 155 feet long. A second smaller tug would accompany the tanker but not be tethered to it. The Kulluk incident demonstrates that when things begin to go wrong at sea , as they often do in storms and high seas, even far greater towing capability and much smaller tows can be compromised.