Refinery Credibility: BC vs. AB
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Review of the Proposed Kitimat Refinery Project, Navigant Consulting, Inc.
The Liberals wonder why they have issues with respect to their credibility, yet they commissioned a report to play politics with David Black's proposed Kitimat refinery, Kitimat Clean, which includes a notice basically saying you can't believe, trust or rely on anything in the report. It will be after the election when Public Accounts are released before anyone will learn how much taxpayers paid for what amounts to another piece of Liberal election propaganda.
On the Liberal website, through Twitter and in radio interviews, Minister of Energy, Mines and Natural Gas, and MLA for Fort Langley - Aldergrove, Rich Coleman wrote: "Kitimat Clean is a $25-billion proposal for a refinery on B.C.'s north coast. It would be the largest private sector investment in B.C.'s history and it proposes to use the most advanced environmental technologies to refine heavy oil into diesel, gasoline and other products." Coleman didn't mention that there are a few challenges that Black's refinery would have to overcome: transport of bitumen to the refinery, environmental approval for the refinery, financing and development of markets for the refinery's products.
NDP energy critic, John Horgan (MLA for Malahat-Juan de Fuca) met with David Black to learn more about his proposal. In numerous interviews Horgan said Black's proposal was interesting but that it would face many challenges; however, he appeared on Jon McComb’s CKNW show and after wishing Black well, he added the famous P.T. Barnum line: "There's a sucker born every minute." Horgan was clearly referring to the unlikely odds of overcoming the challenges and the risks anyone financing the project would face, but the Liberals seized on the comment and claimed that Horgan was calling Black a sucker. Vaughn Palmer and others have pointed out that the Liberals are not telling the truth about that; however, the claim remains on the article by Coleman on the Liberal website. It is a useful lesson that a ten second clip in an interview, however well intentioned, can divert attention from central issues.
Fortunately, the rhetoric and political use of Black's refinery proposal doesn't have to rely on dubious reports, news releases from Kitimat Clean or interviews by Black. The refinery about to be built in Alberta offers a basis of comparison to the claims made with respect to Black's proposal.
In 2004 Ian MacGregor founded North West Upgrading Inc., now operating as North West Redwater Partnership (NWR) together with Canadian Natural Resources Ltd. The plan for NWR is to develop a 150,000 barrel per day refinery near Edmonton to process bitumen into low sulfur diesel. Environmental permits have been obtained, the company has what amounts to $3 billion in backing from the Alberta government and construction is slated to begin this spring. The issue remaining for finalization before construction begins is securing $5.7 billion in financing for its first phase. On March 14, 2013, the Calgary Herald reported Alberta Finance Minister Doug Horner and Alberta Energy Minister Ken Hughes as saying they "are confident the project will go ahead as scheduled."
Compare the numbers behind Alberta's NWR, where $1 billion has already been spent on the project and environmental permits have been obtained, with Black's Kitimat Clean where a few news events have been staged. With NWR, after working since 2004, at a cost of $5.6 billion, 50,000 barrels a day will be processed by 2016. Black claims his refinery will cost $13 billion and process 550,000 barrels a day. Capital cost per barrel/day for NWR is $112,000; Black claims he can do the job for just $23,600. Something is wildly out of whack! It is true that labour costs are higher in Alberta and transportation costs to get machinery to Edmonton are higher, but that isn't enough to account for a five-fold difference in costs. No wonder Navigant's report is so qualified that it basically says don't believe what you read here.
Newspaper publisher David Black will stage more events with respect to his proposed refinery before the May 14th election. We can all wish him well, but serious journalists should contact NWR’s chair Ian MacGregor as well as Alberta Energy Minister Ken Hughes and ask why the folks in Alberta aren't as clever as David Black so as to build their refinery in less time and at 20% of the per daily production barrel cost.