I first heard about the idea of a oil refinery in Kitimat from David Black a number of years ago.
At the time I was skeptical of its chances, based mainly on my 10 years of experience on the board of Imperial Oil. I was accustomed to petroleum economics being centred in Calgary and saw no need for a refinery in Kitimat. There had not been a new refinery built in North America in many years, and any needed increase in petroleum production was achieved by expanding existing refineries.
During my time with Canfor, I made nine visits to China in search of lumber markets. My exposure to the phenomenal expansion of China’s economy opened my eyes to the true merit of the Kitimat refinery concept. I realized it would not simply be relying on the North America market, it could supply the vast appetite of China for petroleum products.
The challenge has been to convince Asian investors to the value of this investment. But it now appears Black is nearing an agreement that could provide the vast capital infusion needed to make this refinery a reality.
Asia’s appetite for oil products will continue to grow and a Kitimat refinery would be ideally situated to take advantage. Asian countries, especially China, are very interested in securing a sustainable supply of resources that will flow freely, without trade barriers such as surprise taxes, regulations or tariffs.
Canada has a good reputation as a reliable free trade country with a dependable source of supply. It’s a very opportune time to attract the vast investment needed to make this project go ahead. Black, with his years of diligence, deserves appreciation for displaying the foresight and courage to invest his time, money and reputation to help bring along this huge initiative.
The positive merits of the project are so profound that it transcends any political ideologies in B.C. Supporters of the NDP, Liberals, Conservatives or Green Party should be able to see the tremendous benefits it would bring.
Let’s look at the “on-the-ground” facts of this multi-billion dollar undertaking.
In the petroleum cycle, from well exploration to the gas station, the jurisdiction that hosts the refining process enjoys a huge portion of the value addition to the raw material.
In Kitimat, that would mean several thousand mostly trade-union jobs for the multi-year term of the construction phase. It would also mean the creation of more than 3,000 permanent jobs for the refinery’s operation and supply support.
The operation could process 175 million barrels per year, creating immense tax revenue that could fund health care, education and vital services for the disabled and elderly.
But job creation and tax revenue are not the only desirable features. It also would provide much lower risk to the marine environment. Shipments from the refinery would be finished products such as aviation fuel, gasoline and diesel, all of which have much less impact on the environment if spilled than crude oil. They would also be transported in smaller ships.
While people on both sides of the aisle see this as a political issue, I disagree. This project can be attractive regardless of political affiliation.
Trade unions would see a significant increase in jobs and memberships. Hospitals and schools across the province would see increased government funding. And business activity, especially in the challenged northwest B.C. region, would be very positively impacted.
The question should not be whether we want this project, but rather, how can we help make sure the petroleum world sees it as an attractive way to invest billions in shareholder capital?
Jim Shepard is retired president of Finning and Canfor, two of B.C.’s largest companies, and a past director on the board of Imperial Oil.