OPEDIT: The Kitimat refinery project

Question not if, but how to ensure it happens: Former Imperial Oil director

Jim Shepard

Jim Shepard

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.