Tuesday, April 23, 2013

Boardroom theatre

The concept of a Kitimat bitumen refinery may have reasons to exist at this moment but none are connected to serious business objectives. Accordingly, David Black's proposition, which if built would rank among the world's largest refineries, has been received with what Gary Mason called a rush of cynicism and doubt.

Last month, Black indicated $25 B financing was arranged through the Oppenheimer Investments Group, a company unknown to the public. This week, Black announced that Oppenheimer is out and the Industrial and Commercial Bank of China (ICBC) will try to organize lenders for the project.

David Black appears to lack technical and managerial experience for a huge industrial project and he does not have the financial muscle. (Torstar carries their 20% interest in Black Press at zero value.) Despite that, CP quoted Premier Clark, "Black driving the development, ensures the project is BC owned." Perhaps Ms. Clark expects bcIMC will find investors for the project in BC.

Its promoter claims Kitimat Clean would process 525,000 barrels per day, making it larger than any refinery constructed on this continent in four decades. North America's last significant refinery project, a facility in Garyville LA, began operating in 1977 at capacity of 200,000 bpd and is now rated at 460,000 bpd.

Source: U.S. Energy Information Administration 

I surmise the project is a Hail-Mary effort to boost Liberal chances in the May election. Liberals lay claim to being a business friendly government and they hope the proposal promotes the Liberals' fantastical promise of a debt free British Columbia. Premier Clark announced that "Kitimat Clean refinery royalty revenues" will be captured by her new Prosperity Fund. Since the Dilbit feedstock would be extracted in Alberta, perhaps Clark is expecting a royalty sharing agreement with Premier Redford.

The second value of Black's refinery proposition is to lessen opposition to the Northern Gateway pipelines. Refining in Kitimat is promoted as a way of exporting petroleum products without the risks associated with water transport of diluted bitumen. However, beginning construction of the pipelines provides no guarantee the refinery will get built. Difficulties in financing a Canadian refinery can be claimed to justify shipping Dilbit to Asia.

Enbridge first disclosed its plans to transport bitumen to BC's north coast in 2003.  After more than a decade of consideration, the company still faces obstacles that delay the start of construction. Kitimat Clean has not completed comprehensive environmental studies for their massive proposal. Unless Canada's Conservative Government totally abdicates environment reviews, 67-year-old Mr. Black has a long road to travel.

However, I don't think it is a road he intends to travel. The scheme is almost certainly an act of theatre from the same Liberals who brought us the Concerned Citizens for BC and its deceitful attacks on Opposition Leader Adrian Dix.

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  1. Just a reminder that it's not simply a matter of Harper's Conservative government abrogating environmental assessment or not. In either case (and, incidentally, if the BC NDP wins, the assessment process will revert back to BC), a much bigger and longer process stands between Albetaria and our coastline: resolution of First Nation Treaties which the SCoC has ruled is Constitutionally required.

  2. 20 to 30 years out, if doable at all. This is smoke and mirrors from the clowns that brought you the hst debacle, the bc rail travesty and a host of other BC liberal scams..turf these clowns completely and lets all get back to the real world..

  3. I'm no fan of the Liberals (any more), but the NDP are certainly nowhere near your "real world".

  4. Well said and thought through Norman; I surmised as much when I first heard of Black's refinery proposal - it was a trial balloon floated for mainly political reasons - nonetheless in the long run "syncrud" probably will be sent in bulk to China, starting with trains to Prince Rupert not needing diluent and not needing pipeline streamcrossings nor tankers in Douglas Sound and maybe no new environmental reviews since the railway capacity for it is already in place!
    Whether BC eventually agrees to a refinery is hard to say but there IS lots of potential dock space and refinery space around Prince Rupert, one of the world's greatest natural harbours.
    But I didn't realize until Black explained it that new refineries must be on tidewater to enable the erection of very large pieces of cracking towers manufactured offshore ...
    Black's partial funding from China may or may not come through but it's an interesting portent of changes in world currencies clout, in which the USdollar is declining. Would BC and/or Canada some day allow hordes of foreign workers and mountains of foreign capital come in to build a massive export-oriented facility somewhere on BC's coasts?
    Assuming the world doesn't blow up in the next few years (which is more likely than it drowning) we in #bcpoli #bc etc will face some challenging choices regarding economic development, job creation, government finances, environmental protection and the processes for government policy planning.

  5. "Industrial and Commercial Bank of China" has unfortunate initials.

    I hope Christy can keeps things straight when she explains this one. (Well... actually, I hope the reverse. 'Got to see her gone!)

  6. Putting a refinery in Kitimat is illogical. It would still mean tankers unloading dilutents that would then need to be piped to Athabasca so they could be blended with bitumen to create dilbit to be piped back to Kitimat for refining into heavy crude oil products. The concept still entails transporting dilutents to Athabasca and back.

    What then? What do you do with the waste? I understand dilbit, after refining, produces a coarse residue that can be burned much like coal. What of the other waste products, particularly the tailings? How would you safely dispose of that.

    What of the carbon emissions associated with the dilbit refining operation? The B.C. government has notionally committed itself to a serious carbon emissions reduction regime. A Kitimat refinery would go a long way to undermining that stated objective.

    I think John Twigg is right about Chinese workers running the refinery. Around the world, including Africa and South America, Chinese ventures consistently import Chinese workers.

  7. Something to think about - Democracy and Violence:


  8. Hi Norm;I know this is off topic and you don't have to post it,but I was wondering if you could find out how much Marine Harvest Canada, Mainstream Canada,and Grieg seafood have donated to the NDP and Claire Trevena in particular in the last couple of years,,Thanks Len

  9. Searching at Elections BC FRPC, I see that Marine Harvest gave BC Liberals $10,000 in 2010. The BC Salmon Farmers Assoc. reportedly gave BC Liberals $3,000 in 2011 and the NDP $450 in 2006, $2,500 in 2010, $6,700 in 2012. (It appears they read the polls.)

    However, these numbers are from a data base at Elections BC that is designed not to easily reveal information. The search capability provided is equivalent to those we used in the early 1990s. For example, searching "BC Salmon Farmers" gives a different result than "B.C. Salmon Farmers".

    Only numbered companies have to name one or two principals so companies can easily be established to pass contributions to political parties without revealing true sources.

    The search engine is something I've twice asked Elections BC to update. They responded that maybe they would consider doing so in the future. Since their search system could easily be improved, we can surmise they don't want it to be more efficient.

    If you want to develop information about fish farmer contributions or Ms. Trevena, check out the
    FRPC site.

  10. Norm, I just had a look at the FRPC. As you point out, its pretty much useless. Since it could easily be upgraded, one is tempted to think its non-improvement is deliberate.

  11. Like many, I am not a fan of the Liberals either, but I also question the validity of some comments by the NDP.
    No matter how you look at it, a country must have an economic base. Wood products, Minerals and Oil...and related rescources are the only incomw B.C. has. How else can we feed thousands of young and old on Welfare, pay out child allowances, lower tolls , and do all these "Freebies " that the NDP promise....OR, is it just a dream???
    As of now, the USA owns most of the oil resources, and we are worried about China? At least China is not involved in perpetuating wars, and placing indigenous people, (South and Central America) into0 a lifetime of despair.Or have they left a legacy such as Bhopal India....

    Think about it!

    1. If you can point me to sources where influential NDP members have called for massive deconstruction of the working economy, I'll write complaints about those views.

      However, I speak my own views here. I worked throughout my life in professional services and small business management and I believe strongly in competitive free enterprise. However, I object to corporate kleptocracy, inadequate transparency of government and business.

      I advocate for an open information society and public access to all files and discussions that affect the public interest. I think individual legislators should have far more power and not be invariably whipped by party leaders.

      Environmental regulation and inspection by scientists are vital. I value clean air, clean water, wilderness areas and farmlands. We owe an obligation to future generations; we cannot simply destroy this world for short term gains.

      I believe competition laws in the economy must be strong and strictly enforced and consumers ought to be treated fairly. I think political activity should be substantially funded by the public and not by big pharma, financial industries, energy conglomerates and other commercial interests that government must regulate.

      An economy can operate under all those elements but an economy needs a strong and large middle class. Otherwise, where will demand come from when the 1 percenters take it all?



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