$13-billion oil refinery proposed for Kitimat

A home is pictured near Douglas Channel, the proposed termination point for an oil pipeline from Alberta in Kitimat, B.C., on Monday January 9, 2012. THE CANADIAN PRESS/Darryl Dyck

British Columbia newspaper magnate David Black has submitted a proposal to build a $13-billion oil refinery in Kitimat as an alternative to shipping heavy crude oil through the province’s waterways.

Black said his company, Kitimat Clean, has submitted an environmental assessment application for a refinery to process the total output of the Northern Gateway pipeline -- up to 550,000 barrels per day of Alberta oil sands bitumen and condensate diluent.

The plant would produce diesel, gasoline and kerosene, which Black said are safer to transport than heavy crude oil and don’t require extensive clean-up should an accident occur.

According to Black, the refinery would eliminate the environmental risk of shipping heavy oil, create thousands of jobs and provide economic benefits to the province.

“The public purse will benefit annually by hundreds of millions of dollars of additional taxes and, of course, we need those,” he said. “We’re running deficits and we have expanding health and education budgets.”

Black also promised the new refinery would be state-of-the-art.

“This will be the cleanest refinery ever built in the world,” Black said. “By keeping this in our backyard we can do the job right from an environmental point of view.”

Black estimated the refinery would create 6,000 construction jobs and 3,000 permanent positions, something he said was the driving force behind his proposal.

“I really worry about the next generation. There’s a lot of kids without decent jobs. You’re not going to be able to buy a house in Vancouver ever if you’re a barista,” he said. “Between the pipeline and the refinery there will be 10,000 construction jobs and they’re going to go for years. A young person could make $100,000 a year … and build a nest egg pretty quickly. That’s why I’m doing it.”

But First Nations groups are weary of people becoming dependent on jobs in the oil industry.

“[First Nations groups] are looking at something a little more permanent, not some non-renewable industry showing up,” said Art Sterritt, executive director of Coastal First Nations.

However, Sterritt did praise Black’s proposal for providing a creative solution to shipping crude oil.

“Mr. Black has recognized and acknowledged that it’s a bad idea to send bitumen offshore in British Columbia. Having a businessman like him recognize that is a step in the right direction,” he said.

Sterritt also pointed out there is no structural way to guarantee all bitumen from the pipeline will be refined in Kitimat.

“Kinder Morgan is currently shipping bitumen [from their Burnaby pipeline],” he said. “All the refineries have been shut down in B.C. and the reason for that is because the world market is not buying processed oil and I don’t anticipate Mr. Black will be able to find those markets as well.”

Sterritt said building a refinery in Kitimat is not realistic.

“It’s pretty far-fetched,” he said. “It would make more sense to process it at the source in Alberta. It doesn’t make sense to bring that out here and have that bitumen travel across the Fraser and the Mackenzie and the Skeena headwaters just to get to Kitimat to process it there.”

If approved, Black said construction would start in 2014 and be complete by 2020.

With a report from CTV British Columbia's Peter Grainger