David Black makes first public presentation to Kitimat Council

The president of Kitimat Clean spoke to Kitimat Council about his proposed $26 billion oil refinery project.

David Black, who heads up a company called Kitimat Clean, made his first public appearance at a Kitimat Council meeting, speaking at length about his proposed oil refinery.

Black, who is also the chairman of Black Press, the company which owns the Kitimat Northern Sentinel, was an unscheduled presenter at the November 4 meeting.

As overview, Black touted the $26 billion price tag the entirety of his proposal would cost, including $18 billion for the refinery, $6 billion for a pipeline to supply the refinery, $1 billion for a fleet of tankers, and $1 billion for a share of a natural gas pipeline.

The refinery had earlier be estimated at $15 billion however the inclusion of Fischer-Tropsch technology, which he credits will reduce the refinery’s emissions from 7 million tonnes year to 3.5 million, will add a $3 billion premium to its cost.

Black spoke to issues such as Canada’s energy policy, and to the safety of pipelines.

“Canada’s in danger of getting a lot of its oil landlocked, and a huge part of our economy in Canada is tied to being able to export our oil,” he said, noting we can only sell our oil to the United States at a significant discount.

He also pointed out that the U.S. is needing to import less and less oil as they refine their own supply.

“So we are fighting with all the other exporters in the U.S. for a diminishing pie,” he said. “Meanwhile the oil we’re producing is going up. So we are desperate for pipelines running somewhere other than the U.S.”

On the issue of pipelines, Black said with projects like Enbridge’s Northern Gateway, the problem as he sees it is not in the pipeline but in the tankers.

“Modern pipelines don’t leak,” he said, pointed to U.S. statistics. He said the numbers show only a handful of leaks over a barrel in the last 10 years, a third of those caused by excavators, and very few from ruptures.

He said the pipe that ran through Kalamazoo was an older pipe and he is referring to modern construction.

He admits that pinhole leaks, which could leak litres of oil a day with no alarm, are still a problem.

He did say during his presentation that if he can’t get Enbridge to bring their proposed Northern Gateway pipeline to serve his refinery — which he has asked for and been denied by the company — then he hopes to serve the refinery with a separate pipeline, or by rail.

Phil Germuth questioned about selling refined product locally, and while Black said byproducts like butane and propane would likely be sold locally, and reduce their price in the region, but complications would arise if he sold refined product in Canada.

“We could provide it cheaper, but of course you’re entering into a price war to do it because there’s already a current supplier, and you’re not going to do very well at the end of that because some of these suppliers are enormous companies, they can wait you out,” he said, saying sending it to growing economies in Asia means you’ll get full price.

Meanwhile he also answered questions from Mario Feldhoff about the benefit of building on the B.C. coast, rather than in-land at the source.

The economy and environmental considerations come into play for that.

For one, he hopes to construct large units for the refinery, such as 300 foot distillation towers, in lower cost areas and bring them in, which reduces the cost. Transporting pieces of the refinery would add $10 billion to the cost, he said.

It would also mean that instead of one pipeline bringing in the diluted bitumen from the oil sands, it would be eight pipelines transporting refined product to the coast.

“You don’t want to have to put in eight pipelines in from Edmonton to the coast, you want to run one,” he said.

As for next steps, Black wants to get financing for a feasibility study which he expects to cost $200 million, which would be undertaken during anticipated environmental reviews which he wants to submit for this fall.

He will also be seeking First Nations agreements regarding potential pipeline arrangements through traditional territories, and wants a memorandum of understanding with the government of Canada to get loan guarantees worth $8 billion to finance the project.