Kitimat Clean Ltd. (KC) is a private company based in British Columbia that was formed in 2012 to plan, construct and operate an oil refinery in Kitimat, BC.
KC proposes to build a world scale state-of-the-art heavy oil refinery and a marine terminal near Kitimat BC at a cost of $22 billion.
KC anticipates borrowing the $22 billion. The Canadian government is being asked to guarantee $10 billion of this amount.
The refinery will process 400,000 barrels per day of pure bitumen from the oil sands region of Alberta delivered to the site in solid form by railway. Bitumen will be processed into fuel products (gasoline, jet fuel and diesel fuel) primarily for export.
The marine terminal will be built near Kitimat on the Douglas Channel.
Kitimat Clean has a strong business case. The ROI on the total project will be 9%. It is expected that all loans will be repaid within ten years once operations begin.
Risks are low for a mega project of this scale. A financing agreement, deliver-or-pay tolling feedstock agreements, environmental approvals and permits, agreements with all governments, and approvals from all First Nations will be signed before significant development funds are spent. Furthermore, a $100,000,000 comprehensive Feasibility Study, which includes all design engineering, capital and operating cost estimates, and financial analyses, will be completed before any extensive construction begins.
There is a very high public benefit to BC and Canada with the development of 2,500 permanent direct jobs, thousands of other permanent petrochemical and indirect jobs, and large new tax revenues for governments.
The delivery of oil from Alberta to the West Coast is of vital importance to Canada because the main export market for Canadian crude, which is the refining industry in the US Midwest and Gulf Coast areas, will require less imported oil in future. Polls show the west coast pipeline will be accepted in BC only if a refinery is built to convert the bitumen to refined fuels before it is placed in tankers. Unlike oil and diluted bitumen, refined fuels float and evaporate if spilled.
The refinery will be built to Canadian environmental and building code standards and it will use new Canadian technology to cut greenhouse gases by two-thirds compared to all other heavy oil refineries.
KC has made significant progress in all areas of the project. Most issues are resolved. The refinery site is chosen and the BC government has reserved the Crown Land. Senior governments as well as the Mayors of Kitimat and Terrace support the endeavour. The company has held consultations with many of the First Nations thus far and believes it will reach agreements with most if not all. The public is supportive locally and throughout BC. A strategy for financing the project has been developed. Fischer Tropsch (FT) technology has been chosen for the refinery to maximize product yields and quality and provide for lower environmental impacts. The company submitted the Environmental Application on March 31, 2016. This Permitting process should take about two years and during that time contracts will be put in place on all the foregoing matters. A major Feasibility Study will be initiated and completed during the same time frame.