Thursday, March 21, 2013

On the monorail to oblivion

On March 7, BC Liberal Premier Clark spoke in the legislature about an industrial project mooted for Kitimat:
"Yesterday, Mr. [David] Black announced that he had found investors willing to back his bid to invest $25 billion in his project. He proposes to build a $16 billion refinery, $8 billion in pipelines and a further $1 billion in new tankers to carry the refined petroleum products to customers in Asia.

"This is a credible proposal from a credible B.C. businessman.

"And without question, this would be the largest single private sector investment in the history of our great province. And it would be, potentially, a tremendous game-changer for our children and their children..."
Roy Peterson from SFU Gallery
Talk of Mr. Black's incredible enterprise reminds me of a business proposal of long ago, also promoted by a superlative wielding Premier.

October 1957, then provincial government leader W.A.C. Bennett called a news conference and said, "This is the most momentous announcement I have ever made." With unstoppable enthusiasm, Bennett demanded his message not be undervalued. The day, he said, was "the most important that B.C. has experienced in its whole history."

Premier Bennett was excited by the project anticipated when his government signed a memorandum of intent with Swedish promoter Axel Wenner-Gren, by which government offered development rights to 40,000 square miles of the province. Centrepiece of the plan was a 200 mph elevated monorail system from southeast BC to the Yukon. It was claimed to be virtually maintenance-free and untroubled by grades. Other promises included forestry projects, mines, dams and hydro-electricity developments. The grand concept was fantastical but it excited only the dreamers, not the realists.

This was not the first momentous proclamation involving Wenner-Gren. Allegedly an arms dealing war profiteer and friend of Nazi leaders, the Swede had been party to other considerable but failed proposals, including a plan to amalgamate four Nordic countries, development of southern Rhodesia and an improbable New York transit plan.

British Columbians were mostly skeptical about the initiatives. Opposition MLAs were opposed and one observer claimed that Wenner-Gren made his money from investors drawn into schemes after carefully orchestrated publicity campaigns. Premier Bennett, who always had eyes on the next election, may have been enthusiastic for Wenner-Gren's projects or he may have used them as convenient levers in the political wars. Cabinet ministers in the fifties sounded much like the Minister of Graft and Corruption sounded this week when he claimed the NDP had no interest in the wondrous economic benefits of David Black's Kitimat refinery and associated Alberta-BC pipelines.

From Kitimat Clean's website - their vision of a bitumen transport and refining facility
There are other indicators that partisan politics are the primary motivators behind Kitimat Clean Ltd. The Globe and Mail reports "Enbridge is not backing the proposed refinery nor are any energy companies." Despite the years long design and approval processes that lie ahead, uncertainty involving input supplies and final markets and the need to gain First Nations support, David Black says the fate of his refinery will be determined within 60 days.

Perhaps a May election will enable that determination.

In Kitimat Refinery Project Demands Transparency, The Tyee published Peter Ewart's devastating examination of the Kitimat proposal. Supposedly, Oppenheimer Investments Group has arranged the funding David Black needs. To most, that claim sounds impressive. The Oppenheimer name has been famous, sometimes infamous, for generations. One Oppenheimer family accumulated billions as controlling shareholders of De Beers, long the dominant force of the international diamond industry. Except, the diamond entrepreneurs have no connection to this story and, as Ewart notes, "Oppenheimer Investments Group has no affiliation whatsoever with the investment bank Oppenheimer & Co, which is headquartered in New York." OIG claims offices around the globe but the only addresses published are email addresses.

Let's say the certainty of $25 billion in financing for Kitimat Clean is unproven.

However, as with the Wenner-Gren proposals of the fifties, David Black's project will have served a purpose if it provides a convenient boost to the government's fortunes. And, BC Liberals are much involved in Kitimat Clean.

Days after Premier Clark's announcement in the legislature, her government released a report from oil industry consultants Navigant, claiming "that building a refinery on the coast of British Columbia has economic merit and should be seriously considered by the government of British Columbia." However, the depth of analysis leading to this conclusion is suspect. On page two of the report is a notice to readers:
"This report ...was prepared for the Government of British Columbia... on terms specifically limiting the liability of Navigant Consulting...

"Navigant’s conclusions are ...based in part upon materials provided by the Client and others, and these materials have not been independently verified for accuracy or validity. Therefore, Navigant does not make any representations or warranties of any kind with respect to the accuracy or completeness of the information contained in this report..."
Facts not independently verified? In other words, the consultant's report has little probative value, shaped as it is by the Liberal government for partisan purposes. Of course, the Chambers of Commerce, the Vancouver Sun and other fellow travellers are applauding uncritically but, given the Liberal record of deceit, we surmise that the entire Kitimat Clean project may ride Axel Wenner-Gren's monorail to oblivion.

By the way, Canada's last coastal refinery was the one built decades ago by John Shaheen in Come By Chance, Newfoundland. The province's heritage website gives this account of a project with less than one fifth of the capacity intended in Kitimat:
"During the mid-1960s, American entrepreneur John Shaheen, owner of Shaheen Natural Revesources Company and various other petrochemical businesses, arranged with Newfoundland and Labrador Premier Joseph Smallwood to construct an oil refinery at Come By Chance, then a small hamlet on Newfoundland’s east coast. The plan, however, was ill-fated and in 1976 caused one of the single largest bankruptcies in Canadian history to that date. It also greatly added to Newfoundland and Labrador’s mounting public debt."

H/T prolific twitter contributor Pete Quily @pqpolitics. Follow him.
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  1. Thanks for the wonderful historical perspective Norm!

    I feel like all we get day in and day out is Fruit Loops...
    Thanks for adding depth to the discussion - that's exactly what we need!

  2. To be fair, the Come By Chance refinery did later reopen, and employs about 500 people.

    1. True, but not before great amounts of public money were poured in to revive the project, which had been mired in technical and legal difficulties that included findings of fraud and other wrongdoings.

      This was another case of socializing losses and privatizing profits.

  3. Norm, perhaps you could explain something to me. Bitumen, once extracted and upgraded, is still too thick to transport via pipeline.

    Tankers bring holds full of dilutents that are then piped from the BC coast to Athabasca where they're mixed with the upgraded bitumen to form a transportable product, dilbit.

    Dilbit not only contains the dangerous chemicals of the dilutent fluid but is also rich in abrasives, acids, toxins and heavy metals, some of them carcinogenic and, as we have seen in Kalamazoo, insanely persistent when spilled.

    The dilutent that has already been piped to Athabasca from the coast now returns to the coast in the form of dilbit. This requires high-pressure pipes and some means to continually keep the dilbit warm enough that it flows.

    Black's proposal would have the dilbit, less any spills of course, that reaches the coast refined in Kitimat into synthetic crude oil to be loaded aboard supertankers for transit to Asia.

    It seems logical that our coast is at less risk from a spill of refined, synthetic crude than a spill of dilbit which is said to separate when exposed to water into component dilutent (that travels to the surface and evaporates) and constituent bitumen (that congeals and sinks to the bottom as at Kalamazoo).

    What seems illogical in this scenario is why the bitumen isn't simply refined on site in Athabasca? Why do we need pipelines carrying dilutent to Athabasca so that it can be returned, with bitumen, as dilbit to Kitimat where the dilutents, abrasives, acids, toxins and heavy metals will be refined out?

    A fully refined, synthetic oil pipeline would be easier to build, maintain and operate not to mention safer and more amenable to oil spill cleanup if/when the need arises.

    BTW, what does Black propose to do with what he refines out of the dilbit? I have read that the Texas refineries transform much of it into a coal substitute that is also burned.

    And then we have the energy/emissions issues. It seems obvious that an operation such as this would mean abandoning British Columbia's stated GHG emissions targets. Shouldn't those emissions more appropriately fall to Alberta's carbon budget?

  4. Consider the cooling water needed for a refinery to be built inland, from the coast...about 35 km from tidewater. Where would they get the high volume of water needed? The salmon habitat in the area, not to mention a coastal ecosystem just down an important consideration as to whether this project would go ahead. Pollution in the air, water, potentially groundwater, (most of the area is covered in huge gravel or clay beds) at a high risk...

  5. Assuming financing is in place, (apparently a big assumption ;-), nobody has explained why it's necessary to pipe diluted bitumen across 1500 miles of pristine wilderness, into a seismically active area to refine it. Why hasn't this been proposed for Northeast BC, or Alberta?

    I guess Black and the Liberals are trying to sell the job-creation merits for BC and the North Coast. However I believe the environmental concerns trump the economic benefits.

    1. Black's rationale: building the refinery on tidewater facilitates transport and placement of cheap, foreign built components too large to ship by road or rail to inland locations.

      My rationality: assuming the proposal is not merely a stalking horse for a pipeline, any project of this size where cheapness of parts and economy of placement is critical, where risks must assumed by the public, cannot possibly be profitable and good at the same time.

      Every excuse for not building refining capacity near source is pretty lame; altogether they're ever more lame.

  6. Norm, thanks so much for bringing up the parallels to Wenner Gren. I have tried mentioning that in Twitter dialogues about Black's refinery and have gotten little response, other than polite advice that I am wasting time, no one knows what I am talking about.

    1. The 140 character universe is good for pointing at worthwhile reads but not very effective for explanations of issues that are beyond simple.

  7. Thanks for highlighting the "fine print" from page two. If Christy's office supplied Navigant with crucial "facts," then the resulting report is suspect — at best.

  8. Sounds more and more like corporate manipulation of the voting public. A smokescreen to "convince" the public that the merits of the energy projects in the region are in the best interest of all. Obviously the "all" are politicians in trouble and business interests that have high stakes in the projects succeeding.
    Apparently, the folks in Kitimat woke up this morning and discovered that their private port, became public yesterday. No consultation, review or public scrutiny....hmmm how do you say "tongue in cheek", ram the project through no matter what?

    Sounds like this is what both the federal and provincial governments want to do in the first place, no matter what the result of public scrutiny or review.

  9. Having repaid taxpayers for a portion of Liberal organizer Brian Bonney's wages, the party should repay the cost of the Navigant report. It can not be taken seriously as economic analysis and is simply part of Christy Clark's electioneering.

    1. Good point, Les. Do we know how much the report cost?

  10. Scotty's correct. Black claims it would cost another $10 Billion to build the refinery OFF tidewater. I don't know how often I've told David to build the damn thing on Slave Lake! Barge the (Cheap,Chinese) Components up the McKenzie River to the refinery location on Slave Lake. Shorter, cheaper, safer,non seismic route from McMurray to Slave Lake. Pipe the synthetic (safer-than-dilbit) product through the McKenzie Basin (safer,non seismic, accessable) route to tidewater at Tuktoyaktuk, or bring your barges up the McKenzie. And take advantage of the 10+Billion Bbls of oil and 55 trillion+ cuft of gas in the bay off Tuk.
    OH, and get a customer who'll sign on for delivery in 10 years or so.
    OH, and make sure no other country (eg, China, Russia, Australia, etc, etc) doesn't have a glut of this stuff too!

    He just never seems to listen!
    John's Aghast!

    1. Gee whiz. You imply the Kitimat project is a non-starter? What a surprise!

      Thanks though, despite your continuing attention to logical detail, the comments are always worth reading.

      Scotty's too.

  11. With all the unanswered or not logically anwsered questions on the most reasonable location for this refinery one has to look at the real purpose for this proposal. Wooden nickels??.
    Why Kitimat where it would be fully dependant on the pressurized bitumen pipeline and another pipeline that supply the dilutant?
    What would the work schedule look like? Would pipeline completion be required prior to starting work on such a refinery? If so why?
    The timing of Mr. Black's proposal seems questionable in itself and the questions must be asked given the massive opposition [me included} to this pipeline.

    1. The important reveal in this story is Black's assertion that "the fate of his refinery will be determined within 60 days."

      It took me months to get approval on a simple home renovation what with the platoon of engineers needed sign-offs. How is Mr. "I'm not a billionaire" Black going to deal with all the unknowns within 2 months.

      The whole fantasy is simply not believable. It's a product of the BC Liberal spin machine.

  12. Black originally said his $13 Billion refinery would cost $20 Billion if built where the god damn tar sands are.
    I say: SO WHAT?

    Ray Blessin

  13. Hmm... according to Wikipedia: "Enbridge expects these pipelines to be completed by 2015.[12] The project, including a marine terminal in Kitimat, is expected to cost C$5.5 billion."

    Take most of the $5.5B (and the $13B) and make the refinery near the source — then ship the refined goods by rail. No need for FN negotiations or devastating spills of difficult chemicals.

    Main problem: it doesn't help Christy get elected... but what would?

  14. March 18, a Vancouver Sun article by Brian Morton quoted extensively from the Navigant report but neglected to mention the notice to reader on page 2 and the fact that the report is based on representations not independently verified.

    I wrote Brian Morton ( stating that he failed to report an important aspect of the Navigant report. Of course, Morton may have written it and had that part deleted by Vancouver Sun editors. We'll see if he provides any answer.

  15. The refined dilbit should pipelined from Alberta EAST!

  16. Why do we always engage with this bullshit rolled out before an election? Nothing is worth the time and effort to debate as everything is all pure crap to try and buy your vote. There is no need to say anything but to label it for what it is, electioneering.

  17. The powers that be rely on our ignorance.

    The tapestry of power is woven through with many threads. We need many voices to keep history alive.

    fyi new report from Doyle

  18. The biggest proponent/backer of David Black's multi-billion deal is one of his former newspapers Editors .... who has been in Christy Clark's inner circle of Pam, Lorne, Brian, Mike, Dimitri, Ken, Kim. Drum Roll: Shane Mills, past Director of Communications, currently Director of Issues Management, who's right hand person was Rebecca Scott... think CBC Victoria chief caught up in a Conflict of Interest .... of Ethnic Memo fame.

  19. To add another historical perspective...That disclaimer reminds of the one that was inserted into the original 'Fairness Advisors' report for BC Rail that went like this:

    "Note: At the time at which this report was submitted, the transaction process was not yet complete. Thus, our observations and findings are based only on the steps that have occurred to date. Also, we have not interviewed the three finalist proponents so their comments and views are not represented in this document."

    In other words, that report was used as PR cover to say that everything was on the up and up despite the fact that the so-called 'fairness' advisor had not actually spoken to the folks who were screaming (ie. the bidders not named CN Rail) that everything was most definitely NOT on the up-and-up.

    This stuff really is a never-ending stream of highly corrosive codswallop that is being used to drive the body politic mad with cynicism.


    1. True, I listened to Minister of Something Pat Bell claiming everything was perfect with the Prince George wood centre project because Premier Photo Op's pal, the not-so-independent Fairness Advisor, said complaints fall outside her mandate. Brian Hutchinson of National Post calls that a "ten-story scandal."

      Similarly, the BC Rail review process was designed to produce a desired result and not stand in the way of Campbell turning over BC Rail to his friend. That friend by the way is still benefiting from Liberal largess. The Auditor General issued a report on air ambulance services. Oddly, the government has no actual means of considering needs or evaluating services provided. It should come as no surprise that the McLean family (of CN and BC Rail fame) are big players in delivery of air ambulances services. They also provide executive jet service to Premier Photo Op, very valuable contracts as Bob Mackin has written about.

      Taxpayers waste substantial dollars on consultants reports and "fairness" oversight processes that are established entirely for ass-covering political purposes.

      Now, after the public has become wise to Liberal cheating, many of these people exit stage left clutching huge pensions for their part-time jobs. Speaker Barrisof, caught handing out $600,000+ to his office mates, leads with almost $100,000 lifetime income. How does that compare to the average taxpayer's pension?

  20. There is no comparison, pension wise.
    These pensions should be rescinded, on the grounds that malfeasance has been perpetraited against the public trust. Simply put, the institution of the legislature, as a formal organization of government, has been subverted, by a political party of dubious intent. In most democracies, subversion of government is a crime, and should be investigated by an intelligence agency.
    Proceeds from any crime would be returned to the public trust or government accounts, as they are classed as I'll gotten gains, or misappropriated funds.
    Indeed it has been stated that "they have an iron clad legal opinion, as to the legality of such a payout", albeit a "verbal opinion" on this legality.

    Norm, the malfeasance of this government and indeed some of the friends in the government, runs deep.
    The taxpayer and indeed the electorate, deserve a forensic audit of all government accounts and indeed contracts made by this political party, while in government for the past 11 years.

    In addition, any misapropriation, financial disparity as in the BC rail scandal, or other form of economic or public resource irregularity, should be reviewed and where warranted, charges laid.

    This governments sad performance, in the public eye, is a disgrace and wreaks of the stench of patronage, malfeasance, and complete lack of integrity. Accountability, transparency and reponsibilty, should be demanded and enforced.



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