Refinery backer says he'll build his own pipeline if necessary
DAVID Black says he’ll build his own pipeline to carry crude oil from Alberta if that’s what it takes to supply a massive refinery he wants to build on the Dubose plateau north of Kitimat.
“I have the financing. That’s not a problem,” said Black last week following a presentation to the B.C. Chamber of Commerce March 6.
Black provided an update on his project first announced last August to build a 550,000 barrel-a-day refinery supplying Asian and other customers with gasoline, diesel and jet fuel among other products.
The cost is now in the $25 billion range and Black said he has a general agreement with his company called Kitimat Clean to line up the money through the Swiss-based Oppenheimer Investment Group although more detailed negotiations have to take place.
“I hope to sign a financing [memorandum of understanding] with 60 days,” said Black of the debt-financing for the project.
But first he needs to demonstrate he has customers for the refinery’s output and Black expects to have a memorandum of understanding, called an off-take agreement, in place within a month.
Black wouldn’t comment on whether those potential customers include any of the 10 companies who have provided Enbridge with the seed money for its Northern Gateway Pipeline project.
It’s those companies who have interests in the Alberta oil sands and want to ship the raw product overseas but who, for now, lack a way getting their product to the coast.
But Black did say the generally accepted business model for refineries elsewhere is for their owners to also own the pipelines supplying the raw product.
“Then you’re dealing with suppliers who are locked in,” said Black, adding that it’s a more efficient way to do business.
Black wouldn’t comment directly on whether he’s considered asking Enbridge to sell its Northern Gateway project but he has told Enbridge its concept of shipping crude to the coast through a pipeline and then having the unrefined product taken overseas won’t be accepted in B.C.
“I’ve thought a lot about that,” said Black. “I think it would be very, very difficult now for Enbridge to win.”
The company is now in the middle of extensive public hearings and a final decision to accept or reject the project is expected from the federal government late this year.
Part of that is the publicity from the company’s Kalamazoo, Michigan spill in July 2010 and the company’s own failure to win acceptance for Northern Gateway, he added.
And that means a fresh start without Enbridge might be considered, said Black.
“I do think pipelines can be built safely,” said Black, adding that Enbridge’s own Northern Gateway plans call for drilling underneath rivers to run pipe instead of crossing them on the surface and drilling through mountains instead of running pipe over them.
Any pipeline project of Black’s would require not only environmental approval but the approval of First Nations along the route.
Enbridge said it has signed economic deals with First Nations along the route and has offered them chances to take an equity stake of up to 10 per cent in Northern Gateway.
Publicly, however, First Nations along the B.C. portion of the route say they remain opposed to the project.
Last week Premier Christy Clark spoke in favour of the project in the legislature, saying the refinery project would have to meet environmental and safety standards but welcomed the prospect of adding value to a natural resource.
Energy minister Rich Coleman also said the province would be willing to sell Dubose area Crown land for the refinery location.
That’s also Kitselas First Nation traditional territory and while Black says he has had general talks with the Kitselas, nothing formal has been set out.
“We are on the same page, however,” he said.
The refinery would be the first in the world to use a technology developed by Expander Energy of Calgary that reduces the greenhouse gases emissions related to processing heavy oil by 50 per cent per barrel. That adds an additional $3 billion to the price tag of the refinery, but Black said it is an important part of the project.
“This will broaden the province’s economy, create thousands of high paying union and non-union jobs, create work for B.C. Contractors and pay a high amount of taxes to the province,” he said. “Best of all it will improve the world’s environment, and that is a key reason why this old newspaper man and his family as so keen on the idea.”
The presentation came the same day as the B.C. Chamber of Commerce released a poll showing 52 per cent support the refinery and 66 per cent support the plan if an environmentally sound way of transporting bitumen from Alberta to the refinery can be found.
David Black is the chairman and majority owner of Black Press, a company which includes The Terrace Standard, The Northern Sentinel in Kitimat and The Northern View in Prince Rupert.