The provincial government’s opposition to the proposed Northern Gateway pipeline may be a massive hurdle for proponent Enbridge, but it has done nothing to dampen David Black’s resolve to build an oil refinery on the province’s northern coast.
In fact, the Victoria-based newspaper magnate says he’s not surprised Northern Gateway got the province’s thumbs-down.
“I’ve thought for a long time — and I’ve told Enbridge directly — that I didn’t think their proposal in the end would find approval in B.C., principally because their proposal is to ship bitumen offshore,” said Black.
The provincial government last week outlined its opposition to the $6-billion Northern Gateway project in its submission to the federal joint review panel looking into the project. The province said the company’s plans do not adequately address concerns about environmental damage.
Black, who has been offered support for his project by Premier Christy Clark, said with Enbridge facing defeat, he has looked at alternatives to bring crude oil to his proposed refinery.
“One option would be a different pipeline proposal which doesn’t involve shipping crude offshore and the other would be railway,” he said, though he favours a new pipeline given the disruption extra trains would bring to small northern towns that already deal with long delays at level crossings.
Black’s company, Kitimat Clean, has budgeted enough to build its own pipelines to a refinery that would be located at Dubose, between Terrace and Kitimat.
The overall $25-billion pricetag would cover $16 billion for a refinery, $6 billion for a bitumen pipeline from Alberta, $2 billion for a natural-gas pipeline to fuel the refinery and $1 billion for tankers to transport refined fuels to buyers in Asia.
Black said depending on what happens with Enbridge’s proposal, he may look at buying some of the research work they’ve already done on a pipeline between the oilsands and B.C.’s coast.
“They have spent a lot of money so far and some of it has been spent in areas we would need to duplicate in terms of engineering and geo-tech work, and perhaps we could buy that,” he said, noting he has not ruled out working with the company to build it. “If we go with a pipeline, I expect I will be speaking with all experts in the field.”
Black has hit a complication in terms of financing the entire project, however.
While he announced in April that Kitimat Clean had signed a memorandum of understanding with the Industrial and Commercial Bank of China for 100 per cent of the funding, the bank’s commitment appears to have been scaled back to 75 per cent.
“It wasn’t unexpected — very quickly they said, ‘We are a normal bank and we need you to have some skin in the game in Canada … there must be some equity,’ ” said Black. “So I have to raise some money.”
Black, who owns about 150 newspapers in Western Canada and the U.S., brushes off the task as just another on a long to-do list. He suggests there may even be government help along the way.
“There’s a good return in this refinery, and if I needed to reach for private capital, it would be there,” he said. “But it is also strategically important for Canada and B.C. and Alberta and historically, when something like this, of this size, comes along, the Canadian government has thrown its weight behind it.”
Black said the government has in the past enabled the construction of projects like the Lloydminster upgrader or the Hibernia offshore oil development.
“They did it in such a way [that] they get paid out and make money on it in the end,” he said. “And I have every reason to believe this is as strategically important as anything else has ever been, so I believe that money would be there again.”
As far as having to jump through the same hoops that have tripped up Enbridge — the government’s five conditions, which include getting through the regulatory review process, assurances over spill response, dealing with First Nations and ensuring economic benefits to B.C. outweigh any risk — Black has no concerns.
“I believe in those — to me, they are just common sense,” he said. “Whatever I propose will definitely meet all their criteria.”
