A new oil refinery planned to refine Canadian oil sands crude sent to a Pacific port by Enbridge Inc.’s controversial Northern Gateway pipeline would be economically viable and should be seriously considered by British Columbia, according to a new report.
The report, carried out by Navigant Consulting for the government of British Columbia, said the refinery could be built at a cost of $13-billion, well below the $16-billion price tag placed on the project by David Black, the press baron backing the concept.
The 550,000-barrels-a-day plant would easily be Canada’s biggest refinery and would refine crude shipped from Alberta to the port of Kitimat on British Columbia’s northern coast. It would be the first new refinery built in North America in three decades.
“Navigant’s view, based on the information available at the present time, is that building a refinery on the coast of British Columbia has economic merit and should be considered seriously by the Government of the Province,” said the report, dated March 14. “Such a refinery would provide incremental long-term economic benefits to the region ... (and) would generate sustainable margins that otherwise would be lost to Asian purchasers of Canada’s oil sands production.”
Mr. Black, whose Black Press runs 150 newspapers in Canada and the United States, including the Beacon Journal in Akron, Ohio; the Honolulu Star-Advertiser; and the Advocate in Red Deer, Alberta, proposed the facility last year as a way to lower the environmental risks of shipping heavy crudes from Canada’s oil sands by tanker and to provide jobs in the province’s north.
He said the entire project could cost up to $25-billion, including the costs of pipelines and tankers.
Mr. Black said this month he is close to finalizing debt financing for the project. He is working with Swiss-based Oppenheimer Investments.
The Navigant report concluded that there was room in the Asian market for the refinery’s products, which would include 100,000 barrels per day of gasoline, 240,000 bpd of diesel fuel and 50,000 bpd of jet fuel.
“Navigant concluded from our assessment of the fuel product balance in Asia that exports from a refinery at Kitimat could probably be accommodated in the Asian market without disrupting local spot prices,” the report said.
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