Kitimat refinery would be a game-changer – by Gordon Gibson (Globe and Mail – August 20, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

In a startling development, the Enbridge Northern Gateway pipeline idea has been resurrected. Until Friday, the smart money was calling this line doomed by overwhelming political forces. Its chances must now be at least 50-50.

The startling development is a proposal for a $13-billion oil refinery at Kitimat, B.C., that would provide 6,000 construction jobs for five years and 3,000 direct jobs thereafter, as well as thousands of service spinoffs. Hundreds of millions of dollars in new tax revenues would be generated annually. In effect, our resources would have value added here instead of in China. No government could ignore that kind of opportunity.

On the environmental side, the idea would vastly reduce concerns about tanker accidents. No longer would the floating behemoths be carrying heavy bitumen. Instead, the cargo would be diesel, gasoline or jet fuel, all of which evaporate quickly after a spill. Environmentalists should be overjoyed.

The proponent is David Black, a highly successful and respected British Columbian. He has built a chain of 150 newspapers with annual revenues of half a billion dollars. His interest in this idea started during his time as chair of the BC Progress Board, a body appointed by the B.C. government to assess the provincial economy and its ability to provide social services. Central to this was looking for ways to add value in the province rather than exporting raw materials.

Mr. Black is bankrolling the environmental assessment application, which will begin immediately. But even he cannot write a cheque for $13-billion, so major financing must be found for this project to proceed.

He notes that the major Canadian oil companies would benefit greatly from a pipeline to the Pacific coast. International markets would pay so much more for our oil than do the Americans, who have us “over a barrel,” so to speak, because our existing pipeline system makes them our only customer.

Net new revenue to Canada could be as much as $15-billion a year, a bonanza to be taxed for health care and the like.

That said, Mr. Black advises quite candidly that those companies have to date shown no inclination to provide financing. In their opinion, refining is the low-profit side of their business and they think they can just bull through a crude pipe and sell the raw material. Just about every political analyst would say those companies are crazy, but Big Oil has never been known for sensitivity to public opinion.

For the rest of this column, please go to the Globe and Mail website: