Black says funding lined up for Kitimat Clean refinery

Kitimat Clean Ltd president David Black says all the funding for his proposed oil refinery in the Kitimat Valley is lined up.

Kitimat Clean Ltd president David Black says all the funding for his proposed $25 billion refinery in the Kitimat Valley is essentially lined up.

He made the comments at a B.C. Chamber of Commerce breakfast meeting in Vancouver this morning, where he also suggested that oil transportation is coming to Canada’s West Coast, whether it’s through a pipeline or by rail.

“If B.C. remains set against a pipeline the oil will come to the refinery by rail. CN and the oil companies are keen on this. A great deal of crude in North America is being moved by rail now. The costs are not that different in this case and no permits are required,” said Black.

“The site of the refinery is 15 kilometres from the main rail line to the Rio Tinto Alcan dock and we would need six trains per day, 120 cars in each direction, to bring the same amount of oil as the pipeline… But rail shipping is not as safe as moving by pipeline and is more disruptive. There are dozens of small communities along the line that I’m sure wouldn’t like more trains rumbling through town.”

Between the refinery and the eight pipelines to carry product to a terminal in Kitimat, the total capital costs associated with the project ring in at approximately $25 billion, with a consortium of investors committed to providing the money. Black said that makes this project the largest investment in B.C. history, and would create the most jobs out of any undertaking in the province.

“We are talking about 1,500 direct jobs at the refinery and 1,500 jobs for contractors servicing the facility. During construction, we would require 6,000 workers for a five-year period… Typically there is a one-to-one job ratio with this type of job creation, so that would add another 3,000 indirect jobs,” he said, adding that ownership of the refinery would remain in Canada.

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. 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,” he said.

Black hopes to have the refinery operation by 2020, and said finding customers shouldn’t be a problem.

“I have had a lot of discussions with the Far East and there is a lot of interest from a number of countries. There are a variety of reasons they are interested, but the main one is that we can land jet fuel and diesel in their country cheaper than they can make it,” he said.

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.

Black’s presentation was augmented by Richard Cook from the Oppenheimer Investment Group who said his company has spent several months lining up financing for the project.

“We have the financing committed to do this whole project,” said Cook.

“We are there from the start to permitting to building.”

That kind of work involves lining up off-takers or customers for the refinery’s products, he added.

Cook also said a successful refinery project would open the doors to other resource-based investments in B.C.

The refinery financing would be in the form of debt as opposed to companies taking out an ownership position in the project.

Black later cautioned that financing agreements in place are of a general nature and that more detailed negotiations are required.

And he’s sticking to a 60-day timetable set about three weeks ago regarding firm project commitments.

– Shaun Thomas, Black Press