Instead of pipelines, build refineries here – by Susan McArthur (National Post – November 5, 2011)

The National Post is Canada’s second largest national paper.

Susan McArthur is a senior investment banker at Jacob Securities Inc.

$100-billion ­investment needed over 20 years

The continuing controversy in the U.S. surrounding TransCanada’s proposed Keystone pipeline may just be the best thing that ever happened to Canada. Perhaps it will force us to finally just say no to being hewers of wood and drawers of water. While Keystone’s success is important, it’s time Canada comes of age and starts to transform more of its resources into value-added products at home.

When it comes to our oil resources, this is no small undertaking. The price tag to build the infrastructure and refining complex scaled for our vast oil reserves could be as much as $100-billion and could take 20 years.

We have the resources, the natural proximity to ports, rail infrastructure and voracious customers south of the border and within 36 hours of our export terminals. All it takes is vision, capital, know-how, tenacity and chutzpah. And a big bold plan.

We don’t need to look very far for vision. Northwest Red Water Partnership (NRWP) is a perfect example. Founded by Ian Macgregor’s Northwest Upgrading and in partnership with Canadian Natural Resources Ltd. and the Alberta government, NRWP is the first new refinery to be built in North America in 30 years.

The $15-billion project is the stuff legends are made of. Alberta decided it wanted its share of the higher, less-volatile margins that come from converting bitumen to refined products. NWRP won the government’s tender and as a result a new refinery is being built at home, which will process a portion of Alberta’s royalty production.

Alberta and CNRL have committed a total of 50,000 barrels a day to the project for the first of three phases. The returns to the province are enormous — jobs, taxes and a share in the refining margins, which to date have accrued to large multinational oil companies (i.e. not Canadians). If Phase 1 of the refinery had been in operation last year, the province would have raked in an additional $500-million on its royalties.

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