Premier Christy Clark’s government is getting ahead of itself when it comes to David Black’s multi billion-dollar idea for an oil refinery at Kitimat.
There aren’t too many development ideas that get endorsed by the premier of B.C. on the floor of the legislature before they’re even fully submitted for approval.
Clark stood up last week and, with one small reservation, gave the whole audacious enterprise the green light.
And Tuesday, the government released a curious study it commissioned that also endorsed the economics of the project, after selectively leaking it earlier to maximize the positive impact. Why did taxpayers pay $40,000 for a paper on the economics of a private project that is several years away from a construction start and isn’t even firmly in the approval process yet?
Energy Minister Rich Coleman said it was important to determine the viability before too much staff time in the government’s major-project office is committed to the project.
But you’d think the potential profitability of the project at this point is up to Black to figure out. The reason for the B.C. Liberals’ enthusiasm for the project is pretty clear. They’re using Black’s refinery concept to cement the impression their government is all about development, jobs and wealth. They want as clear a contrast as possible between that vision of prosperity and the NDP’s skepticism — to the point of outright rejection — when it comes to oil-based northern industrial
So they hired a London-based expert with Navigant Consulting to review the idea — before Black even had the financing nailed down.
The stated purpose was to estimate the economic performance of the refinery and determine if a Kitimat refinery could make money selling fuel in Asia. The expert did a 28-page report that found the idea “has economic merit and should be considered seriously.”
Black’s concept, briefly, is tied to the proposed Enbridge Northern Gateway pipeline, designed to carry bitumen from Alberta to Kitimat for export to Asia. Black wants to build a huge refinery at Kitimat and ship refined fuel, rather than crude.
It would maximize the economic impact of the pipeline and mitigate some of the coastal marine risk since refined fuel isn’t considered as hazardous as unrefined. The consultant noted that refinery profitability has been low in recent years and many have been closed or gone bankrupt. But he said it happens for various complicated reasons and doesn’t mean refining is a permanently unattractive industry.
Clark last week used the occasion of Black’s announcement that he has virtually secured funding for a $25-billion venture to line up firmly in favour. And that was before she’d even seen the consultant’s report. It would be the biggest private project in B.C.’s history and be a “game-changer for our children and their children,” she said. The project includes its own smaller pipeline, and Clark said her five conditions for approving Enbridge’s idea also apply to Black’s. (The conditions are: Completion of environmental review, best spill response on land and at sea, addressing First Nation treaty rights and a fair share of the benefits for B.C.)
Clark said the big difference between the Enbridge and Black proposals is that a refinery near Kitimat “could form part of the economic benefits needed to satisfy our fifth condition, although I do need to be clear that although it could form a part of that, it will not go all the way.”
Waxing enthusiastic, she said it would create thousands of new jobs that aren’t in the current mix. And refining before shipment would “radically reduce environmental risk” because the tankers would be smaller.
Clark said the government has been working constructively with Black to identify a site for the refinery and wants to move the proposal forward “where it can be judged on its merits by a robust, rigorous and, most importantly, independent environmental process, free from political influence.”
It was probably worthwhile to point out that last bit, given how ardent she and her government seem to be in promoting the idea.
The New Democrats are opposed to the Enbridge line and very dubious about Black’s idea. So approval will be a long, hard haul, most of it uphill, if they win in May. But it’s getting a lot of boosting from the Liberals in the early going.