I first heard of this concept from David Black a number of years ago.
At the time I was skeptical of its chances . My initially negative attitude was
based mainly on my experience of 10 years service on the board of directors
of Imperial Oil. Since I was accustomed to the discussion of petroleum
economics centered in Calgary, I saw no need for a refinery in Kitimat. That
attitude was based on the fact that there had not been a new refinery built
in North America in many years. And any needed increase in petroleum
production was achieved by expansion of existing refineries throughout North
America. But after my service with Imperial Oil, I went on to serve four years
at Canfor which led to my 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. It made me realize that
it would not be just another refinery relying on the North America market
but rather a refinery that would supply the vast appetite of China for
petroleum products. The challenge will be to draw the attention of Asian
investors who would see the value to this investment. It appears that David
Black, after many years of effort, is nearing an agreement that could
provide the vast capital infusion needed to make this refinery initiative a
reality. The appetite for oil products for all Asia will continue to grow
and the Kitimat refinery is ideally situated to take advantage . Asian
countries, especially China, are very interested in securing sustainable
supply of resources that will flow freely without undue trade barriers like
surprises with taxes, regulations or tariffs . Canada has a good reputation
as a free trade country that can be relied on as a dependable source of
supply. Now is a very opportune time to attract the vast investment needed
to make the Kitimat refinery go ahead. David Black, with his years of
diligence , deserves our 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 Kitimat refinery are so profound that this
project is really beyond any political persuasion . Any and all
supporters of NDP, Liberal, Conservative or even Green should see the
tremendous benefits that would come to BC with this project.
This initiative will involve the investment of many billions of dollars.
That's for sure. It's hard for any of us to visualize a million let alone a
billion of any thing. So let's look at the "on the ground" facts of such an
undertaking for all of us in BC.
Let's start with the big picture. When it comes to the benefits of a
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. For the KRC project 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 over 3,000 permanent jobs for the
operation and supply support of the refinery when running.
This refinery would be processing 175 million barrels per year which
means the tax revenue that could go toward healthcare, education, vital services
for the disabled and elderly would be immense.
But job creation and tax revenue is not the only desirable feature of
the KRC.
It also would provide much lower risk to the marine environment. The
shipments out of the refinery would be finished product like aviation fuel,
gasoline and diesel These products, if ever spilled, would have much less
impact on the marine environment. They would also be transported in
smaller ships.
I know there are those on both sides of the political aisle that
address this as a political issue. And I would disagree with both. This is a
project that can be attractive to all political stripes. Trade unions would
see a significant increase in jobs and memberships. Hospitals and schools
across the province would see an improvement in government funding. Business
activity, especially in the challenged northwest B.C., would be very positively
impacted. And those with a concern for the threat of marine spills would see
a significantly reduced exposure for the environment .
Based on the huge positive impact this initiative could have on BC , I
think the question should not be if we want it, but rather, how can we
help make sure that the petroleum world sees this as an attractive way to
invest billions of shareholder capital.
Jim Shepard
Jim is the retired president of Finning and Canfor, two of
B.C.'s largest companies, and a past director of Imperial Oil.