In the race to move energy off Canada's West Coast, David Black hasn't garnered much attention. The soft-spoken newspaper magnate is, after all, an outsider, a man with a giant dream to build a refinery near Kitimat, B.C., but pockets too small to make it happen.
Now Mr. Black says he is a month away from signing an early agreement toward a staggering $25-billion in debt financing to build pipelines, supertankers and one of the largest refineries on Earth.
"We hope to sign this within the next 30 days. We haven't signed it yet," the founder of Victoria-based Black Press Ltd. said Wednesday. "It is a memorandum of understanding that is fairly broad, and we'll be negotiating the details down the road, which is typically the way these things are done."
In the oil patch, the refinery plan has been met with skepticism, given that Mr. Black's experience lies in newspapers, not the complex and enormously expensive world of refining crude. Industry analysts have expressed doubts about his ability to sign firm contracts for fuel sales. They say it could be tough to persuade Canadian oil companies to sell their product in British Columbia, which could curb their ability to secure high prices in the competitive Asian marketplace.
On Wednesday, in a breakfast speech before the Vancouver Chamber of Commerce, Mr. Black sought to quiet some doubters.
For the past several months, he has worked with Oppenheimer Investments Group, a Swiss firm that has financed airports around the world and a new city in the Middle East.
"When we put a project together, we don't do the traditional funding and walk away," said Richard Cooke, Oppenheimer's senior managing director for the Americas and Africa. "We are there from start to finish. So we will be working with David from the permitting to the building to the final end, when the refinery is producing."
Unveiled last August at a cost of $13-billion, the Kitimat project is now expected to cost $25-billion: $16-billion for the refinery, $6-billion for an oil pipeline, $2-billion for a natural gas pipeline and $1-billion for supertankers.
Oppenheimer has never done anything on that scale.
"Our specialty is in $1-billion to $3-billion projects. We have done projects over $10-billion," Mr. Cooke said in an e-mail.
But, he told the Vancouver audience, initial deals are in place to cover the entire cost. "We have arranged and we have the funding committed to do this whole project," he said.
The Kitimat project is the single-largest private investment ever envisioned in British Columbia.
Mr. Black envisions a 550,000-barrel-a-day diluted bitumen refinery that would transform oil sands product into fuels like gasoline, diesel and jet fuel. If built, it will bring with it 3,000 operational and 6,000 construction jobs, and a way to have B.C. profit from oil moving across its territory.
Mr. Black has also argued for its environmental merits, saying greenhouse gas emissions – which he is hoping to cut in half using new technology – will be produced whether oil is refined in Canada or China.
Coastal waters, he says, will be easier to clean up in case of an accident with refined fuels. And he says there is an economic case to be made for a B.C. refinery, which can use cheaper parts manufactured in Asia and secure access to cheaper oil from Alberta.
The latter calculation may, however, prove difficult. Canada's energy industry has sought Pacific exports largely because it wants higher Pacific prices.
That could make it difficult for Mr. Black to secure Alberta oil – and analysts say it may be dangerous to build a project on the assumption that North American oil will stay cheap for decades to come.
"You're not going to see these $40 discounts like you are today. They're not going to last," said Steve Fekete, manager of downstream energy consulting with IHS.
The sheer cost of the project, and its remoteness, are also likely to prove difficult hurdles, he said.
"It's going to be tricky."