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December 2014

Stockwell Day pitches ‘Canada’s greenest refinery – BUSINESS IN VANCOUVER

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Pacific Future Energy refinery proposed for Prince Rupert would be half the cost of David Black’s $22 billion Kitimat Clean

“Canada’s greenest refinery” would cost $10 billion to build but would generate $1 billion a year in profits, says former Conservative cabinet minister Stockwell Day, chairman of the advisory committee for Pacific Future Energy.

That’s half of what David Black’s Kitimat Clean oil refinery would cost to build, according to the findings of a Hatch Ltd. engineering and feasibility study released by Black last week.

The two refinery proposals have a lot in common.

Their main selling points are that they would avoid the environmental damage that a bitumen spill would cause on B.C.’s coast because refined fuels such as diesel and gasoline evaporate.

Both project proponents believe that will go a long way to securing the kind of social licence with First Nations and the general public that pipelines alone have had a hard time getting in B.C.

To help sell the project to First Nations in B.C., Pacific Future Energy has recruited two high-profile former First Nations political leaders as directors – Shawn Atleo and Ovide Mercredi, both of whom are former Assembly of First Nations chiefs.

Unlike the pipelines proposed by Enbridge Inc. (TSX:ENB) and Kinder Morgan Inc. (NYSE:KMI), which are intended to feed refineries overseas, both B.C. refinery proposals would provide more jobs for British Columbians – about 3,000 direct permanent jobs in Kitimat Clean’s case, its backers say.

At a presentation to the Vancouver Board of Trade last week, Day said the refinery proposed for Prince Rupert would use cutting-edge technology to reduce carbon emissions.

“We’re talking about near-zero emissions,” Day said.

The refinery would cost $10 billion and would need a new pipeline, which would add another $6 billion to $8 billion to the project’s cost.

That’s close to the $13 billion that Black’s refinery was originally projected to cost when first proposed in 2012.

But last week, Black said the Hatch study raises that estimate to $22 billion. The project would also require another $11 billion to build a new pipeline and tanker fleet.

The Kitimat Clean refinery would be more expensive than a conventional refinery because the technology it would use would reduce by half the amount of greenhouse gases produced in a traditional refinery.

Asked how Pacific Future Energy could build a near-zero-emission refinery for half the cost of Kitimat Clean, Day said the production capacity would be 250,000 barrels per day – slightly more than half of Kitimat Clean’s daily production of 460,000 barrels.

“The engineering groups worldwide that have done projects like this … have drilled down into the numbers,” Day said. “They say that our economic model stands up.”

Day said declining oil prices would work to the project’s advantage.

“For us it means that the raw product that we’re going to be getting per barrel is going to cost less,” Day said.

Day said that based on an estimated 250,000 barrels per day of refined petroleum at $25 per barrel, the refinery’s projected profits are $1 billion a year EBITDA (earnings before interest, taxes, depreciation and amortization).

By Nelson Bennett
nbennett@biv.com

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Pacific Future Energy recruits former First Nations chiefs to help launch project

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Pacific Future Energy, undaunted by industry skepticism over its plans to build a B.C. bitumen refinery, has recruited two former national chiefs of the Assembly of First Nations to help launch the venture.

Shawn Atleo has been named to the company’s management roster as senior adviser of partnerships for the project. The proposal envisions taking bitumen from Alberta’s oil sands and converting it into refined products for export to Asia. And Pacific Future Energy appointed Ovide Mercredi to its advisory board.

First Nations have been vocal critics of shipping bitumen from the West Coast, but that doesn’t mean that they are against economic development, said Stockwell Day, the former federal international trade minister who joined Pacific Future Energy in August as special adviser.

Mr. Day said there is room in the oil market for Pacific Future Energy’s proposed $10-billion bitumen refinery. “This is being seen as doable and it’s making sense to people,” Mr. Day said Wednesday after delivering a speech to the Vancouver Board of Trade. “We’re now heavily engaged in a second round of funding.”

The site of the refinery has yet to be selected, though Prince Rupert is on the shortlist.

Oil experts say there appears to be a compelling argument about how Pacific Future Energy could obtain a social licence to operate, but the economic justification falls short because Asian refineries have cheaper labour and lower capital costs.

Company officials, however, point out that U.S. Midwest refineries are already processing Alberta bitumen and reaping significant profits by turning the Canadian raw material into petroleum products for sale in the United States.

No major new refinery has opened in Canada since 1984 because the business has thin profit margins and high capital costs, industry analysts say. Over the years, existing large oil refineries have focused on streamlining their operations to become more efficient, while smaller refineries have closed their doors.

Mr. Mercredi said there needs to be a new approach on the energy file to recognize aboriginal rights and title.

Mr. Atleo added that Pacific Future Energy has a long-term vision for a sustainable industry in northwestern British Columbia. Looking at Mr. Day and also referring to himself, Mr. Atleo joked: “Pacific Future is an important recovery program for recovering politicians.”

The project’s officials are drafting plans amid widespread opposition from First Nations in British Columbia to Enbridge Inc.’s Northern Gateway pipeline proposal, which aims to transport diluted bitumen from the oil sands to Kitimat. Much of the opposition has focused on fears of spills from oil tankers off the West Coast.

Pacific Future Energy is one of two major refining proposals seeking to challenge the conventional wisdom in the energy industry that Canada should still focus on trying to export bitumen to Asian refineries.

The other B.C. refinery proposal is called Kitimat Clean Ltd., spearheaded by B.C. newspaper publisher David Black. Kitimat Clean comes with a $33-billion price tag – $22-billion on an oil refinery, $8-billion on a pipeline and $3-billion on other infrastructure and a tanker fleet. Production is now slated to start in 2022 in Kitimat, compared with an earlier goal of 2020.

Hatch Ltd., commissioned by Kitimat Clean, recently finished a seven-month study of the project and configured designs for what it calls an environmentally friendly refinery. Both Kitimat Clean and Pacific Future Energy are striving to have the “greenest heavy-oil refinery in the world.”

What has yet to be determined is where the financing will come from for the billions of dollars required to build and operate even one B.C. heavy-oil refinery, and the Coastal First Nations have said many aboriginals are nervous about such operations and the associated pipelines.

BRENT JANG
VANCOUVER — The Globe and Mail
Published Wednesday, Dec. 10 2014, 3:06 PM EST

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Former AFN chief Shawn Atleo adds starpower to Pacific Future Energy – BC BUSINESS

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Advisory board chair Stockwell Day calls First Nations appointments a ‘good start’

Just two short hours after being replaced by Perry Bellegarde as chief of the Assembly of First Nations (AFN), Shawn Atleo was unveiled as the new senior advisor, partnerships, for Vancouver-based Pacific Future Energy Corp.—one of three companies bidding to build an oil refinery on B.C.’s northwest coast.

Atleo made the surprise appearance at a scheduled speech by former federal Conservative cabinet minister Stockwell Day, Pacific Future’s advisory board chair, to the Vancouver Board of Trade on Wednesday. “I have 25 years of experience, the last 15 years directly, in elected politics,” Atleo told the audience in a Q&A after Day’s speech. “Pacific Future is a very important recovery program for recovering politicians,” he said to laughter.

The 47-year-old Vancouver Island native was recently tapped by B.C. Premier Christy Clark to travel the province to engage in “dialogue sessions” about various priorities between First Nations and local and business leaders. At Pacific Future, Atleo joins the management team to help the company build cooperation with B.C. First Nations and bring the project—billed as a “near-zero emissions” refinery—to life.

“I had the privilege, over the last five-and-a-half years—and over a decade at the Assembly of First Nations—to travel to most of the First Nations communities across the country. The little bit that I learned about energy was just enough to be dangerous—and just dangerous enough to join this team. This project doesn’t just have local implications but Canadian and global implications.

“This is about creating a real conversation, as opposed to it being either/or,” he added. “This is about recognizing First Nations as governments—and those conversations, I’m really pleased to say, are going extremely well, because the approach is one that First Nations have been looking for for a long, long time.”

Day, in his speech, also took the opportunity to announce that Ovide Mercredi, another former AFN leader, and Chief Robert Louie of the Westbank First Nation would be joining Pacific Future’s advisory board.

“Some may be saying, ‘That’s a lot of First Nations involvement.’ When I hear that comment, I go, ‘Yeah, it’s a good start,’” said the former Harper cabinet minister. “We believe profoundly, as Shawn will tell you, that involvement with First Nations has to be more than going through the motions. It has to be something that’s heartfelt and believed. We hear about the Williams case and some people talking about that, saying it’s really created a lot of roadblocks and obstacles…. We don’t see that as presenting obstacles. We see that as pointing to a way forward—and Shawn has been particularly helpful with that.”

The Pacific Future refinery, if it goes ahead, would cost $10 billion to build and would process 200,000 barrels of bitumen a day. The company expects a projected $1 billion EBITDA per year from the refinery, and Day argued that the economic conditions—including the U.S.’s recent push to energy self-sufficiency and a burgeoning Asian consumer market—make it the right time to build Canada’s first refinery since the 1970s. “The refineries that are running now have been running for 50, 60, 75 years—and they’re still making money,” said Day. “We say it’s time for Canada. It’s time for all the people of Canada. And it’s time to put our First Nations people front and centre.”

Matt O’Grady | Dec 10, 2014

Company behind B.C. refinery proposal moves to engage First Nations. – Vancouver Sun

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Pacific Future Energy appoints two former national chiefs to advisory positions

Vancouver-based Pacific Future Energy has appointed two former First Nations chiefs to its team.

The company is one of two with ambitious proposals to limit damage from a massive oil spill by refining oilsands bitumen on the B.C. coast and then shipping the lighter, refined products, like gasoline, to buyers in Asia.

The proponents say that in a tanker accident, bitumen sinks to the ocean floor and is thus harder to contain and collect.

Pacific Future, which plans to build and run a $10-billion refinery, faces considerable skepticism, but aims to process 220,000 barrels of bitumen a day in its first module.

On Wednesday, it said Shawn Atleo, former national chief of the Assembly of First Nations, will be a senior adviser and Ovide Mercredi, also a former National Chief, will sit on its advisory board.

“The involvement of First Nations has to be more than going through the motions,” said Stockwell Day, a former federal international trade minister who joined the company in August as a senior adviser.

On a day when crude prices continued to drop after OPEC’s decision against curbing global oil supplies and analysts warned of a slowdown in many capital spending plans, Day told a Vancouver Board of Trade luncheon “there are obviously going to be some momentary challenges to different people depending on where you are on the whole line of activity.”

“If you are in the airlines business right now, this is a good thing for you,” said Day. “This is not a bad thing for us either.”

“For us, it means our raw product per barrel will cost less. Our byproduct will cost less, too, so our margin just moves up and down. The same profit is there.”

“If we were trying to raise money to drill a bunch of wells or get into some new horizontal drilling in a particular area, we would be having a challenge. … But we are going to be refining what is continuing to be needed. Demand for oil products is not dropping.”

Day said, however, that as the U.S. becomes increasingly self-sufficient, there is an even more compelling reason to seek overseas buyers.

He described the demand in Asian countries including China, India and Vietnam as “simply staggering as people move into job markets and become consumers.”

Even though there is talk of a slowdown in these economies, Day maintained that concern needed to be relative.

“If it’s 6.8 per cent growth, (instead) of 7.1 per cent, it is still phenomenal.”

Day said the company, which is backed by Mexican conglomerate Grupo Salinas, is working toward a second round of funding that will take it to 2016.

Its efforts come as Victoria-based David Black, founder and chairman of Black Press Group Ltd., has been trying to get public and government support for his Kitimat Clean Ltd. It also aims to take bitumen from the Alberta oilsands, refine it on the B.C. coast and ship it to Asia.

So far, the publisher has been investing his own money into the venture and said that China’s largest bank, the Industrial and Commercial Bank of China, will help with financing the company’s estimated $21-billion refinery.

By Joanne Lee-Young, Vancouver Sun December 10, 2014

joanneleeyoung@vancouversun.com
© Copyright (c) The Vancouver Sun

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B.C. heavy oil refinery project names aboriginal leaders as advisors – Financial Post

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CALGARY – Two high-profile aboriginal leaders are expected to join the Pacific Future Energy Corp. proposed heavy oil refinery project in British Columbia in advisory roles.

The company is expected to announce Wednesday that Shawn Atleo and Ovide Mercredi, both former national chiefs of the Assembly of First Nations, will join the Vancouver-based company.

Pacific Future Energy is planning a refinery to process Alberta bitumen. Its first phase would cost $10-billion and process 200,000-barrels-a-day of bitumen from the oil sands that could be transported by rail. The next four phases of the project, which would raise the cost to $34-billion, could be supported by a pipeline.

Mr. Atleo is expected to join its management team as senior advisor. Mr. Mercredi is joining as member of an advisory board chaired by former federal cabinet minister Stockwell Day.

“I see this as a major opportunity to shape a new direction in major project development,” Mr. Atleo said. “The only way a project will proceed is if First Nations are directly involved, and providing their consent and their support, and their full partnership if that is what they choose.”

Mr. Mercredi said there is a great need for a new approach that recognizes traditional lands and territories and “the third order of government.

“Where governments failed, perhaps, developers, industry and the business world can succeed,” he said.

The appointments come as another project, the Northern Gateway pipeline proposed by Enbridge Inc., is planning to offer greater equity participation and control to B.C. First Nations.

Samer Salameh, Pacific Future Energy’s executive chairman, said his company wants to work with Canada’s aboriginal peoples by showing full respect of their inherent rights and title. “We stand in full support of achieving a true partnership with Indigenous Peoples, communities and families,” he said.

Claudia Cattaneo | December 10, 2014 8:31 AM ET

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SHAWN A-IN-CHUT ATLEO AND OVIDE MERCREDI JOIN PACIFIC FUTURE ENERGY

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VANCOUVER – December 10, 2014 — Today, Samer Salameh, Executive Chairman of Pacific Future Energy, announced that Shawn A-in-chut Atleo, former National Chief of the Assembly of First Nations, has joined its management team as Senior Advisor – Partnerships, and Stockwell Day, Senior Advisor, and Chair of Pacific Future Energy’s Advisory Committee, announced that Ovide Mercredi, also a former National Chief of the Assembly of First Nations, has joined Pacific Future Energy’s advisory board.

“We are very excited to have both of these individuals join our company in senior roles,” said Samer Salameh, Pacific Future Energy’s Executive Chairman. “There is only one way to work with Canada’s Indigenous Peoples and that is in full respect of their inherent rights and title. We stand in full support of achieving a true partnership with Indigenous Peoples, communities and families.”

“We have reached a moment that marks an important opportunity for Indigenous Peoples to forge a new energy vision, grounded in our rights and responsibilities, on the global economic stage,” said Chief Shawn A-in-chut Atleo. “First Nations values and principles will shape this long term vision and the potential for a new, more sustainable, energy industry for all British Columbians and Canadians.”

“I am very pleased to join Pacific Future Energy with business visionaries who want to change the development landscape in Canada, said Ovide Mercredi. “There is a great need for a new approach that recognizes traditional lands and territories and the third order of government. Where governments failed, perhaps, developers, industry and the business world can succeed. This is the time to think outside of the status quo. There is much to do to change how business and governance is done here at home. But the good news is that it can be accomplished with visionary approaches, good will and kindness. I look forward to being part of a team that will change the development narrative and make big contributions to the way forward.”

About Pacific Future Energy

Vancouver-based Pacific Future Energy is a company that has been developed to finance, design and construct the world’s greenest oil refinery in British Columbia, Canada. The management team consists of leaders from the venture capital, corporate and government sectors, who share the belief that while it’s in Canada’s national strategic interest to diversify its markets for oil, it should be done in a socially and environmentally responsible manner while ensuring the protection of Canada’s west coast.

For further information or to arrange interviews please contact:

Stephen Smart
Citizen Relations (on behalf of Pacific Future Energy)
Tel: 604-647-6268
Email: stephen.smart@citizenrelations.com