By David Black
September 26, 2012
Opinion: Refinery would strengthen B.C. and Canada – Proposed $13-billion facility with technological efficiencies, environmental superiority and easy access to Alberta bitumen will boost GDP
Our consortium, Kitimat Clean Ltd., filed an environmental assessment application on Sept. 21 to build an oil refinery in Kitimat, the first such refinery to be built in Canada since 1984.
Why am I proceeding with this $13-billion project? Simply put, this is a nation-building idea that will work and is in the interests of both Canada and British Columbia. Construction will employ 6,000 workers for five years. Permanent employment to operate the refinery will be 3,000. Hundreds of millions of dollars of new tax revenues will flow to government every year. This one refinery will generate $2 billion of exports every month and will reverse our negative balance of trade. The business case is strong. The naysayers are wrong.
Let me first dispel the oft-repeated red herring over the future market prospects of a Canadian refinery – that there is no market for the petroleum products that would be produced by a West Coast oil refinery, leaving no alternative other than to ship oilsands bitumen to others by supertankers off the west coast.
This is simply not true. South Korea exported $51 billion of gasoline, avgas and diesel in 2011. It is a very profit-able endeavour there even though it has to import all of its crude oil first, and even though the cost of natural gas which powers its refineries, is four times higher in Korea than in Canada. Singapore is also an exporter in the Far East. Closer to home, in 2011 the United States exported $88 billion of refined fuel. In fact refined oil is the largest single export category for the U.S.
And what is one of the main feed stocks of the refined petroleum from those job-creating U.S. refineries? It’s Canada’s oilsands. In fact, The Oil and Gas Journal reports one of the few risks to this renaissance of U.S. refiners would be an interruption in the supply of Alberta oil flowing south.
So there is indisputably a strong world market for refined petroleum products. Furthermore a West Coast refinery is much better positioned geographically to take advantage of markets in the Pacific, including the U.S. West Coast.
One of the competitive advantages U.S. refineries have is they buy Canadian oil at deeply discounted prices – Alberta’s oil fetches rates about 20 per cent below world price in the U.S. This helps make some of their older refineries competitive with others elsewhere.
However, a new Kitimat refinery, built at a cost of $13 billion, would have significant advantages over those U.S. refineries.
We would build a more modern facility that would drive more efficient production and be much cleaner. Also it would have access to B.C.’s own supply of cheap and plentiful natural gas for power and a steady supply of Alberta bitumen at a fair price. A West Coast refinery would also eliminate any risk of a devastating super-tanker spill of oilsands bitumen off the coast. This is because the products that would be transported would be the lighter, refined byproducts of petroleum, such as gasoline, which are easier to clean up and also naturally dissipate in the rare event of a super-tanker spill.
Peter Lougheed, Alberta’s visionary premier who died this month, was a leader who always believed Canadians had to move away from being hewers of woods, drawers of water – or mere exporters of oil. He believed in the business case for Canada in refining our natural resources at home, because it would produce Canadian jobs, taxes to pay for our schools, hospitals and highways, and build our national economy and society.
This is precisely the reason it is now our responsibility to pursue the feasibility of a West Coast refinery. Yes, it is a complex endeavour. We need to make sure that the markets are there and bring together the investment to make this mega-project happen.
But we can do it. I can say that, because we already have. Canada is a proven and longtime player in refining petroleum products. The 19 refineries that now exist on Canadian soil account for 17,500 high-paying jobs and generate billions of dollars in revenue.
Yet, in recent years, this vital sec-tor has been shrinking. The Conference Board of Canada predicts in the five-year period from 2011 to 2015 the refining sector’s contribution to the GDP will drop by $4 billion, eliminating more than 38,000 person years of employment.
A West Coast refinery, with its modern technological efficiencies, environ-mental superiority, access to Alberta bitumen and B.C. natural gas would reverse this trend. It would be a highly competitive producer.
Providing a pipeline can be safely built – and I believe it can with hard work – a West Coast refinery is an idea we have a duty to explore and embrace.
As Peter Lougheed said, refining our resources at home “would be a better thing to do than merely send the raw bitumen down the pipeline to be refined in Texas. That means thou-sands of new jobs in Texas” and few at home.
I suspect most British Columbians – and Canadians – would agree.