David Black’s oil refinery would be clean, expensive

David Black’s proposed oil refinery in Kitimat would cost $5 billion more to build than a conventional refinery, but would produce...

David Black

David Black’s proposed oil refinery in Kitimat would cost $5 billion more to build than a conventional refinery, but would produce one-third of the CO2 emissions, according to a feasibility study commissioned for Black’s Kitimat Clean project.

The British Columbia newspaper owner commissioned Hatch Ltd. to conduct an engineering and feasibility study on his proposed oil refinery.

The study itself has not been released. But in a press release, Black said the study puts the capital cost of the refinery at $22 billion.

That’s $6 billion more than the estimate of $16 billion made in 2013, and $9 billion more than the $13 billion estimate made in 2012.

And it’s $5 billion more than a conventional refinery because it would have one-third of the CO2 emissions of a traditional coking refinery, Black said in a press release (10 million tonnes annually, compared with 33 million tonnes.)

But it’s not just the refinery’s lower CO2 emissions with which Black hopes to earn public support for Kitimat Clean – it’s the environmental concerns that it would address with the respect to an oil spill at sea.

One of the biggest concerns over the Northern Gateway and Trans Mountain pipeline proposals is the damage a diluted bitumen oil spill might cause to B.C. coastline.

Unlike diluted bitumen or crude oil, refined fuels, like diesel or petroleum, do not cause the same kind of cleanup problems, should a fuel vessel rupture.

“Since these refined products float on water and evaporate, the consequence of any spill at sea is greatly diminished,” Black said in a press release.

Black is an avid sailor and has said one of his motivations for Kitimat Clean is that it would address one of the environmental concerns posed by shipping Alberta oil by tanker to Asia.

According to the Hatch study, the refinery would employ 3,000 workers, with another 3,000 employed in related petrochemical operations.

Black's refinery would require 550,000 barrels of bitumen per day to produce 460,000 barrels of refined fuels. The Northern Gateway pipeline – the only one proposed to terminate in Kitimat, where the refinery would be located – would have a capacity of 525,000 barrels per day.

Last year, when asked if Enbridge Inc. (TSX:ENB) would supply oil to Black’s refinery, Enbridge spokesman Todd Nogier told Business in Vancouver the company is committed to shipping bitumen to overseas customers.

"I have been assuming for some time that we will have to build our own pipeline, or at least have someone else do it for us," Black said in an email to Business in Vancouver. He estimates the cost of a new pipeline at $8 billion.

Last year, Black told B.C. business leaders that the company has investors lined up willing to invest in the Kitimat Clean project.

nbennett@biv.com