Media Coverage

Voice of BC – Oil Refineries For BC

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While the media and public’s attention has been primarily on developments like LNG, Northern Gateway and Site C, there is another resource proposal being pitched. In fact two companies are currently looking at and investing research capital into oil refineries for BC’s coast.

Jeffrey Copenance from Pacific Future Energy and David Black from Kitimat Green discuss their specific proposals and why they believe they would be good for BC. They are in conversation with Vancouver Sun columnist and host of Voice of BC Vaughn Palmer.

Oil Refining In Canada Makes Sense – Market Wired

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Third-party economist’s report shows value-added enterprises would be highly profitable in Alberta

EDMONTON, ALBERTA–(Marketwired – Oct. 6, 2014) – A new, comprehensive report on the economics of upgrading and refining in Western Canada shows that an integrated upgrader-and-refinery plant would be highly profitable if it were built in Alberta today.

The report, entitled “Upgrading Our Future: The Economics of In-Province Upgrading”, was released on Monday, Oct. 6, at an event featuring Alberta Federation of Labour president Gil McGowan; representatives of two separate companies with proposals to build refineries in Ontario and BC; and the report’s author, Ed Osterwald, an internationally recognized energy expert and senior partner with UK-based Competition Economists Group (CEG).

“Today, we’ve proven to Albertans that it makes economic sense to think like owners of the oil sands, and keep good jobs here,” McGowan said. “Albertans should get the maximum value out of the resources they own. Doing so creates more jobs and wealth. It just makes sense for us as a province, and for us as a country.”

The report updates a 2006 study commissioned for the Government of Alberta’s Hydrocarbon Upgrading Task Force. [2006 HUTF study by David Netzer] By applying today’s costs and prices to the 2006 study, Osterwald showed that oil-sands upgrading, refining and petrochemical manufacturing remain highly profitable – especially if the Province of Alberta were to take a stake in the project.

“There is an emerging consensus on the need to add value to our natural resources before they get shipped overseas,” McGowan said.

Among the participants in the release of the report was former federal international trade minister and former Alberta treasurer Stockwell Day, who has recently joined the advisory board of Pacific Future Energy, a BC-based company proposing a $10 billion oil sands refinery in northern British Columbia. Day will join the proceedings via teleconference.

“We support efforts like Pacific Future Energy, who are clearly looking to expand Canadian manufacturing and the good jobs that go with it,” McGowan said. “Some might call it strange bedfellows, we call it a coalition of common sense. We’re delighted that there are leaders in the private sector committed to keeping good, long-term, middle-class, family-sustaining jobs in Canada.”

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Will Stockwell Day’s no-subsidy, pro-aboriginal green refinery fly?

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Stockwell Day’s refinery project on the B.C. north coast leaves little room for error.

The Pacific Future Energy refinery, proposed by the firm of the same name and headed by several men with experience outside of the refining business, must build a plant against a backdrop of closing refineries across Canada, convince local First Nations to come on board as they fight over petroleum projects in the region, and achieve a stated goal of near-zero emissions during production.

If it sounds crazy in practice, it sounds perfect on paper — especially to the political class.

British Columbia has put up stiff resistance to the Northern Gateway pipeline and tanker project, which would carry unrefined bitumen products through the province’s north and along its coastline, because of spill risks and the lack of aboriginal consent. But the drop in U.S. energy demand and the ever-present hunger for oil in Asia remain a critical concern for policy-makers looking to expand Canada’s energy sector.

The attraction of this type of project as a solution to the complex new paradigm whereby both governments and companies have to achieve a ‘social license’ is so great that Premier Christy Clark even had the Ministry of Energy, Mines and Natural Gas pen a report on the potential of another ‘clean’ refinery in northern B.C. last year. Just this week, Alberta Premier Jim Prentice suggested Kitimat, the port chosen for Northern Gateway, may not be the best route for oil to make its way to Asia.

“It’s a happy constellation of challenges that has given us this opportunity,” said Day, who pitched the project to the Economic Club of Canada at the Chateau Laurier yesterday morning. It’s one of three refinery projects for the B.C. coast: one named Kitimat Clean has been proposed by newspaper magnate David Black and another by the Aquilini Investment Group.
Day, a senior advisor to Pacific Future Energy who left a storied 10-year political career in Ottawa for the private sector in 2011, is in an odd position vis-a-vis his fellow Conservatives as he makes the case to build the refinery, now past the concept phase and looking for financing.

For one, the project is an opportunistic challenge to Enbridge Inc.’s Northern Gateway, now fumbling its way through aboriginal opposition and delaying its start date despite getting federal government approval in March. The Conservative government roared out of the gates when Gateway began the last phase of its regulatory process, slagging environmentalist opponents and streamlining its permitting at the National Energy Board in 2012.

But despite threatening a project that the NDP are hoping will be an albatross around the neck of Conservatives in the next federal election, Day doesn’t believe he’s eating away at his party’s support.

“I haven’t talked to (Industry Minister James Moore) specifically about this project, but I can tell you from everything I’ve seen him say, we’re virtually on the same page,” said Day, referring to one of the more outspoken B.C. Conservative cabinet members. “We think under the right conditions, under the right technology, economic arguments can be made that are also environmentally sustainable.”

The Pacific Future Energy refinery hopes to make a niche for itself among British Columbians opposed to raw bitumen in tankers, but less antagonized by the transportation of refined products like diesel and gasoline.

The company’s promotional material states that during a spill, “bitumen immediately sinks to the ocean floor and stays there.”

That’s a unapologetic departure from the federal government’s own research, which thanks to a report released in January, found that bitumen only sinks if it mixes with sediment in water.

“The scientific debate is strong,” said Day. “But nobody argues with this fact; a bitumen spill has a much greater impact on the environment than an unrefined product.”

Day’s father made a career shift from Montreal to B.C. to work on a trawler, said Day, and his attraction to Pacific Future Energy is linked to the importance his home province puts on the environment.

“They have a heightened sensitivity regarding environmental issues,” said Day. “As I looked more into this, I became acutely aware to the reality of the fear, some of it rational, most of it rational, of bitumen on the water.”

It also puts him into a similar camp as the NDP, who on Tuesday unveiled a bill that would ban the transportation of oil – any kind – in tankers off B.C.’s north coast, unless they’re meant to serve B.C. communities.

Pacific Energy Futures isn’t supporting the use of legislation to protect B.C.’s waters from economic activity that could result in a spill but is helped by the NDP bill.

“The sentiment in B.C. is so strong about the risk of bitumen in the water,” said Day. “But that legislation reflects the sentiment, so that doesn’t hurt our proposal that we’re talking about. So we’re leapfrogging past legislation to bring it into reality.”

The project is also trying to win its ‘social license’ from British Columbians by designing a refinery that would emit almost zero emissions. Forty per cent would be reduced by the combination of natural gas and renewable energy sources, fifty two per cent by using carbon capture and storage technology and the remaining reductions will be met by using a biogas fuel source, says the firm.

Pacific Energy Futures is in conversation with two companies with carbon capture and storage technology that are still at the non-disclosure phase, said Day. It has retained the services of Italian engineering firm Simeco, which has built similar low-emissions refinery designs in the past, he said.

But more important than winning the good graces of the B.C. general public will be winning the support of First Nations along the northern coast. Emboldened by the results of a Supreme Court of Canada case in June that granted aboriginal title to the Tsilhqot’in First Nation, coastal First Nations are currently deliberating new strategies in their land claim negotiations with the B.C. government.

There are at least nine First Nations identified in the Coastal First Nations alliance, a group of first Nations living along B.C.’s northern and central coast. But Pacific Future Energy won’t disclose which communities it is talking to publicly because it feels this would preempt the conversations the firm is having with leaders, said Jeffrey Copenace, senior vice-president of indigenous partnership at the company. It also hasn’t settled on an exact location.

“There are numerous discussions ongoing,” said Copenace. “But the last thing I want to do is negotiate with First Nations through the media.”

Pacific Future Energy’s consent may also hinge on provincial and national aboriginal leadership, said Copenace, a former deputy chief of staff to former Assembly of First Nations (AFN) National Chief Shawn Atleo. The company is sponsoring the AFN’s golf tournament in Ottawa next weekend, he said.

Pacific Future Energy won’t ever get off the ground if its $10 billion project doesn’t make money. In North America, where demand for gasoline and refined projects isn’t on the rise, building a new refinery is a tough go.

During committee hearings in the House of Commons two years ago, general manager of integration and planning, refining and marketing at Suncor Energy Inc. John Quinn told legislators that refineries are only profitable near the markets they feed. That way, the product can be adapted for demand.

For example, a refinery in India that imports oil from overseas could refine enough of it for domestic demand and still be able to sell refined oil back to the original country at a profit, he said at the time.

Despite growing its oil production, Canada has gone from 39 refineries in 1980 to 16 today, according to the Natural Resources Department.

Pacific Future Energy will not accept subsidies to get it off the ground, Day told the Economic Club.

“We are not asking or looking for subsidies,” said Day. “If a government comes along, be it provincial or federal with some kind of massive proposal that might involve training or something else of course it would make sense.

“That’s why I can stand here and talk freely about it and no one can say that I’m lobbying,” he said later.

Later, during an interview, Day explained that the company would be asking the B.C. government to clarify its tax regime for building a refinery.

“In the Alberta experience and with LNG, whenever there’s lack of predictability on the tax regime, it’s always going to affect you investors,” said Day. “So what we’re going to look for is predictability. We’ll get a sense of where it might land, we’ll build that into our economic model, and we’ll be able to handle the extremes of our range. But clarity and predictability will be important.”

“We’re not asking for special treatment other than, as you can realize, this is a unique project,” he said.
Pacific Future Energy’s executive vice-president of communications and research Mark Marissen is the former spouse of B.C. Premier Christy Clark.

Correction: An earlier version of this article included a typographical error that misrepresented Day’s comments on lobbying. We regret the error.

Amid a struggle to ship crude oil to the West Coast, three crazy ideas emerge

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David Black is used to it by now. Ever since the newspaper magnate went public in 2012 with his idea to build a West Coast refinery that would process Alberta bitumen into gasoline, jet fuel and diesel for export, his plan has been met with skepticism at almost every turn.

It’s easy to understand why. Black is a newspaper man, not an oilman. His project doesn’t have the backing (publicly anyway) of the Canadian oil and gas industry. It would also be massively expensive, costing an estimated $32 billion to build, and he says it would return at best 20 per cent to investors. It would also be located in B.C., where other proposed petroleum-related infrastructure projects – notably Enbridge Inc.’s Northern Gateway pipeline and Kinder Morgan Canada’s Trans Mountain pipeline expansion – have faced stiff opposition.

“As a pure merchant refinery, I can’t see how you make it work.”
On the phone from his ­Victoria, British Columbia home, Black doesn’t sound the least bit discouraged, however. In fact, he says he’s enjoying the journey. “I must say, I enjoy puzzles and this is a great puzzle to try to figure out,” Black says.

Apparently, Black is not the only one who enjoys tackling big, oily puzzles. This year two other B.C. groups have hatched ­major plans to process Alberta bitumen. Their projects don’t have any oil and gas industry backing, either. But the groups proposing them sound just as confident as Black does that their ideas are destined to succeed. While the industry continues to shun building refineries and upgraders in Canada (North West Upgrading Inc.’s controversial refinery in ­Redwater, Alberta, is a notable exception), industry outsiders on Canada’s West Coast are ­soldiering on with their bitumen processing projects. But are they on a fool’s errand? Or are they presenting the oil and gas industry with a viable solution to a thorny problem – how to get landlocked oil sands production from Alberta to the West Coast without raising hackles from First Nations and other B.C. residents who fear shipping bitumen in tankers is an environmental disaster waiting to happen.

In June, a company called Pacific Future Energy Corporation announced plans to build and operate a $10-billion refinery in B.C. to process Alberta bitumen and do it in a way that it says will result in nearly zero carbon emissions. The refinery would take 200,000 barrels per day of bitumen and convert it into diesel, gasoline, kerosene and other distillates. Robert Delamar, Pacific Future’s CEO, credits David Black with helping his company get to this point. “We owe him a great debt,” Delamar says. “He really evangelized this idea.”

Along with Black’s project, which is known as Kitimat Clean, and Pacific ­Future’s “near zero” refinery project, the third in the planning stages is headed up by Eagle Spirit Energy Holdings Ltd. and the Vancouver-based Aquilini Investment Group. In April, they announced a plan to build a bitumen upgrader in Alberta or northeastern B.C. along with a pipeline that would ship up to one million ­barrels per day of synthetic crude to Prince ­Rupert. The cost of this project could be a whopping $50 billion.

The “idea” shared by each of these ­proposals is a way to create jobs and benefits for First Nations people and other residents in B.C. and eliminate the risk of shipping raw bitumen from its coast. “I don’t think any project that proposes [shipping bitumen to the West Coast] is going to have any traction because it poses too much risk to the environment in the opinions of the people we’ve met,” says Calvin Helin, chairman and president of Eagle Spirit, a First Nations-owned company.

The three proposals are a response to Enbridge Inc.’s controversial Northern Gateway pipeline project. The $7.9-billion dual-pipeline system would carry 525,000 bpd of bitumen from Bruderheim, ­Alberta, to Kitimat, B.C., and the conditional recommendation from the National Energy Board has recently been approved by the federal government. Nevertheless, the B.C. government says it still isn’t satisfied that British Columbians and First Nations people will reap an adequate share of the economic benefits from Enbridge’s pipelines. It also says it’s not convinced Ottawa’s oil spill response plans are up to snuff. Even after the federal government granted conditional approval for Northern Gateway in June, the B.C. government said it would not be forthcoming with relevant, and required, construction and access permits unless its concerns were alleviated. Meanwhile, 31 First Nations organizations have said they will fight the project in the courts.

“I don’t think any project that proposes [shipping bitumen to the West Coast] is going to have any traction because it poses too much risk to the environment in the opinions of the people we’ve met.”
Northern Gateway has been promoted by Canada’s oil and gas industry as a way to diversify export markets for Alberta bitumen away from the U.S. – where it fetches discounted prices. While America is swimming in oil thanks to the shale and tight oil revolution, the Asian markets that Northern Gateway is intended to serve look extremely promising. Oil sands production is estimated to grow from 2.3 million bpd in 2015 to 4.8 million bpd, according to the Canadian Association of Petroleum Producer’s latest crude oil forecast. However, with that pipeline project’s future very much in doubt, how are oil sands producers going to secure access to those Asian markets?

On the surface, it seems the three B.C. proposals provides a solution to Canada’s bottlenecked export infrastructure. But Andrew Leach, an associate professor and energy economist at the University of ­Alberta’s School of Business, isn’t convinced the economics make sense. “As a pure merchant refinery, I can’t see how you make it work,” Leach says.

A March 2013 IHS CERA report did however say that given the right conditions, new refinery projects in B.C. could indeed work, “assuming that the refinery can consume bitumen, maximize diesel production, control capital costs to a minimum, and maintain a strong price for its products by not oversupplying the market.” However, that’s a lot of assumptions, and when it comes to controlling capital costs, that could be difficult for the B.C. proponents. “They want to build these projects in northern B.C, which is a high-cost and remote environment. You’re going to duplicate what is going on in Fort McMurray,” Leach says.

Black, Helin and Delamar sound undeterred by the skeptics. Perhaps that’s because they seem to view their bitumen processing proposals not only in the light of their economic viability. In the case of the Kitimat Clean project, the company website claims the refinery will create 3,000 permanent jobs and “nearby petrochemical businesses” will create another 3,000 permanent jobs. Thousands of indirect permanent jobs will also spring up thanks to Kitimat Clean and billions of dollars of new tax revenues will be generated for governments, the website says.

Eagle Spirit’s Helin also has more than dollar signs in his eyes when he talks about the upgrader and pipeline project his firm is proposing, or the refineries Black and Pacific Future hope to build. “When you build a pipeline there is not a lot of employment after it’s built. There is a lot of employment in a refinery. There are a lot of high-paying jobs. There will be millions of dollars in business opportunities with an operation of that scale,” Helin says. “You are talking some enormous benefits that can be invested into educating and training people.”

Black says Kitimat Clean’s return on investment will be 10 per cent – a figure that likely wouldn’t impress executives running the big oil companies in downtown Calgary. However, Black is already a wealthy man (his company, Black Press Ltd. publishes 150 titles in print and online) and if his project results in a modest return on investment, he seems fine with that.

“[Kitimat Clean] is not going to make a 15 or 20 per cent return on investment because you invest so much money in the construction phase for quite a long time,” Black says. “But I don’t have to make a fortune here. I’m all about trying to keep the environment safe and do something good for Canada. I really believe this is the only way we’re going to get a West Coast pipeline.”

Will Kitimat Clean or the other project proposals offer an enticing enough return on investment to merit the enormous capital costs? The financial numbers underpinning these projects are hard to come by at this point, especially with two of them having been announced only since April. Yet the backers behind each project are certainly highly credible. The privately held Aquilini Group owns the Vancouver Canucks NHL franchise and is involved in many business fields including construction, real estate, hospitality and agriculture. As for Pacific Future, its executive chairman is Samer Salameh, who manages the telecom practice and new business development for Grupo Salinas – owned by Mexican multi-billionaire Ricardo Salinas Pliego, the 195th richest person in the world, according to Forbes magazine.

Black’s project is furthest along. He has hired Calgary-based Hatch Ltd. to do the front-end engineering and ­design for his refinery and provide an estimate on capital costs for it. Black says that will be done by ­October and that’s when investors can get a look at the design of the refinery and a decision will be made on whether to proceed with the project or not.

He says the gross annual revenue for the ­refinery will be $25 billion and it is expected the $32 billion required to build everything – including refinery, pipeline and port facilities – will be borrowed. Black has approached the federal government about providing a $10-billion loan guarantee for Kitimat Clean. He admits that without this, the project probably won’t get built.

Leach agrees that it will take a helping hand from government for any of these B.C. bitumen processing dreams to ­become a reality. “I’m not particular ­optimistic about their chances. But I wouldn’t be surprised to see something happen government- wise,” he says. “The question governments have to ask is, ‘Do they want to underwrite oil ­processing?’”

Delamar sounds confident, perhaps even a bit brash, that Pacific Future’s plan will eventually see the light of day. The company is confident it can get the financing to build a refinery, and its social license from First Nations and other B.C. stakeholders – something the Northern Gateway project is struggling to secure.

He also says that what Pacific Future is doing isn’t much different from what oil sands pioneers like Syncrude and Suncor Energy Inc. accomplished many years ago against stiff odds – finding a way to make a profit at producing bitumen. “We’re just following in their footsteps,” Delamar says. “Nobody said they could do what they did and they pulled it off.”

Vancouver Sun – Opinion: Refining lets us control our oil

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By Stockwell Day, Special to the Vancouver Sun August 28, 2014

Canada has a problem. We are blessed with a resource — oil — needed by people around the world but we’re selling 99 per cent of that resource to one customer, the United States. We’re selling it at a significant discount. We do this because it’s what the pipeline infrastructure in North America obliges us to do.

Expanding access for Canadian oil products to new markets, especially those with growing demand in Asia, is the clear solution. This is becoming increasingly important as we experience declining demand in the U.S. due to increased self-sufficiency in its market.

I have been an advocate in the past for a pipeline from Alberta to the Pacific, allowing us to export our bitumen to these fast-growing markets in Asia. Canada’s economy loses billions of dollars every year simply because one of our most important strategic resources is in a captive market.

But many British Columbians — and many others across the country — have expressed deep concerns to me about a number of issues associated with building a pipeline and shipping unrefined bitumen off of Canada’s West Coast. They have convinced me there must be a better alternative.

That’s why I have joined Pacific Future Energy, a new company based in Vancouver. The company’s mission is to build the greenest oil refinery in the world in a manner that respects First Nations consultation and accommodation, provides tangible economic benefits for Canadians, and protects Canada’s West Coast from the threat of a bitumen spill.

Many First Nations feel resource discussions do not always recognize and respect their role in the process. From the beginning, and every step of the way, our partnership with First Nations will ensure we all benefit from traditional and ecological knowledge, while respecting their rights to full consultation and accommodation, all with the goal of shared prosperity and health for future generations.

Many First Nations communities and British Columbians have grave concerns about the impact of a raw bitumen spill along Canada’s West Coast.

Bitumen sinks to the bottom of the ocean and would cause long-lasting devastation. Refined products evaporate within a short period, posing a much smaller risk.

The livelihoods of commercial and recreational fishermen, loggers, tourism operators, as well as indigenous peoples’ ways of life that go back thousands of years, would be irrevocably altered if a bitumen spill were to occur.

To see something as important as the future of our energy industry not rooted in respect and recognition of those issues would not be acceptable to me.

Building the world’s greenest refinery isn’t just good public policy, however. It’s also good business.

Many critics of building Canadian refineries see the world through the prism of multinational companies with global networks of refineries, shareholders, supply routes and investment priorities that are often beyond our borders. Their assertion that a new refinery in Canada can’t make a profit is simply not backed by economic realities.

Dozens of refineries in the U.S. Midwest — which are almost exclusively processing Canadian bitumen sent to them by pipelines — are generating an average profit of $23.50 per barrel by refining Canadian crude into products for sale in the U.S.

The economics of refining are so good, the one per cent of Canadian crude not sent to the U.S. last year was piped across the continent to the Gulf of Mexico, put on ships, carried across the Atlantic Ocean and delivered to Bilbao, Spain. There it was refined and sold on the European markets at a profit.

These are dollars and jobs that could and should be realized in Canada. Moreover, refining our hydrocarbon resources allows us to ensure all possible steps are taken to minimize the impact these resources have on the environment. Even the industry’s harshest critics would agree that selling high-efficiency products, refined in Canada, is far better than simply shipping raw bitumen out of the country.

The only viable solution for the problems facing Canada’s oil industry is to expand to new markets. The way to make this acceptable to a great number of Canadians — especially First Nations — will be through a refinery that delivers jobs and economic benefits for Canadians, while protecting our coast at the same time.

Stockwell Day is a former minister of international trade, treasurer and acting premier of Alberta, and Conservative MP for Okanagan-Coquihalla, and is now the chair of Pacific Future Energy’s advisory board, as well as a senior adviser to the company’s management team.

© Copyright (c) Special to the Vancouver Sun

Opinion: Refining lets us control our oil – Vancouver Sun

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We must build the world’s greenest refinery to build our future and protect our coast

Canada has a problem. We are blessed with a resource — oil — needed by people around the world but we’re selling 99 per cent of that resource to one customer, the United States. We’re selling it at a significant discount. We do this because it’s what the pipeline infrastructure in North America obliges us to do.

Expanding access for Canadian oil products to new markets, especially those with growing demand in Asia, is the clear solution. This is becoming increasingly important as we experience declining demand in the U.S. due to increased self-sufficiency in its market.

I have been an advocate in the past for a pipeline from Alberta to the Pacific, allowing us to export our bitumen to these fast-growing markets in Asia. Canada’s economy loses billions of dollars every year simply because one of our most important strategic resources is in a captive market.

But many British Columbians — and many others across the country — have expressed deep concerns to me about a number of issues associated with building a pipeline and shipping unrefined bitumen off of Canada’s West Coast. They have convinced me there must be a better alternative.

That’s why I have joined Pacific Future Energy, a new company based in Vancouver. The company’s mission is to build the greenest oil refinery in the world in a manner that respects First Nations consultation and accommodation, provides tangible economic benefits for Canadians, and protects Canada’s West Coast from the threat of a bitumen spill.

Many First Nations feel resource discussions do not always recognize and respect their role in the process. From the beginning, and every step of the way, our partnership with First Nations will ensure we all benefit from traditional and ecological knowledge, while respecting their rights to full consultation and accommodation, all with the goal of shared prosperity and health for future generations.

Many First Nations communities and British Columbians have grave concerns about the impact of a raw bitumen spill along Canada’s West Coast.

Bitumen sinks to the bottom of the ocean and would cause long-lasting devastation. Refined products evaporate within a short period, posing a much smaller risk.

The livelihoods of commercial and recreational fishermen, loggers, tourism operators, as well as indigenous peoples’ ways of life that go back thousands of years, would be irrevocably altered if a bitumen spill were to occur.

To see something as important as the future of our energy industry not rooted in respect and recognition of those issues would not be acceptable to me.

Building the world’s greenest refinery isn’t just good public policy, however. It’s also good business.

Many critics of building Canadian refineries see the world through the prism of multinational companies with global networks of refineries, shareholders, supply routes and investment priorities that are often beyond our borders. Their assertion that a new refinery in Canada can’t make a profit is simply not backed by economic realities.

Dozens of refineries in the U.S. Midwest — which are almost exclusively processing Canadian bitumen sent to them by pipelines — are generating an average profit of $23.50 per barrel by refining Canadian crude into products for sale in the U.S.

The economics of refining are so good, the one per cent of Canadian crude not sent to the U.S. last year was piped across the continent to the Gulf of Mexico, put on ships, carried across the Atlantic Ocean and delivered to Bilbao, Spain. There it was refined and sold on the European markets at a profit.

These are dollars and jobs that could and should be realized in Canada. Moreover, refining our hydrocarbon resources allows us to ensure all possible steps are taken to minimize the impact these resources have on the environment. Even the industry’s harshest critics would agree that selling high-efficiency products, refined in Canada, is far better than simply shipping raw bitumen out of the country.

The only viable solution for the problems facing Canada’s oil industry is to expand to new markets. The way to make this acceptable to a great number of Canadians — especially First Nations — will be through a refinery that delivers jobs and economic benefits for Canadians, while protecting our coast at the same time.

Stockwell Day is a former minister of international trade, treasurer and acting premier of Alberta, and Conservative MP for Okanagan-Coquihalla, and is now the chair of Pacific Future Energy’s advisory board, as well as a senior adviser to the company’s management team.

By Stockwell Day, Special to the Vancouver Sun

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Ex-MP Stockwell Day joins company planning to build B.C. bitumen refinery – Globe and Mail

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Stockwell Day has joined the leadership team of a Vancouver company that’s planning to build a $10-billion oil sands refinery on the West Coast.

The former politician, who has held high-profile cabinet posts in the federal and Alberta governments, has been hired as a special adviser at Pacific Future Energy Corp. and will sit on its board of directors. He’ll also head an arm’s-length advisory council that’s expected to be formed over the next few months.

“I’ve been very gratified that I’ve been involved in a number of projects since leaving politics, but this has to be right up there in terms of something that’s exciting for me,” Day said in an interview from Vancouver.

He said the proposed refinery, which bills itself as the world’s greenest, could be a “legacy project for Canada.”

Oil sands producers have been keen to access lucrative Asian markets, but stiff opposition to proposals such as Enbridge Inc.’s Northern Gateway pipeline has put a damper on those ambitions. One of the biggest environmental concerns has been the prospect of bitumen-laden tankers navigating coastal waters.

The Pacific Future proposal – along with others being floated by B.C. newspaper magnate David Black and aboriginal businessman Calvin Helin – would mean refined products, rather than heavy oil, would be shipped on tankers to Asia, making a potential spill less damaging.

Day’s political experience spans the two provinces with the most at stake when it comes to West Coast energy exports. After his time in Alberta’s Progressive Conservative government, Day was the MP for the British Columbia riding of Okanagan-Coquihalla, first for the now-defunct Canadian Alliance and then for the Conservatives.

He also has insight into the thinking of potential buyers of Canadian resources on the other side of the Pacific, having served as the federal trade minister and minister for the Asia-Pacific gateway.

The Pacific Future proposal would mean “high-tech, long-term jobs” for Canada, said Day, who left government in 2011.

“We’re talking about refining product here rather than shipping what really is raw product to other countries and seeing the jobs produced there.”

The environmental aspect is also key, said Day.

“I’ve talked with enough people all over British Columbia to realize that this is a genuine concern and a real impediment in the minds of many people.”

Day said he’s confident there will be interest in the project from both sides of the Pacific.

“What I’ve seen over the last few years in Asia … they’ve got a sincere desire to deal with their own environmental issues and even for them, there are some political advantages for them to be seen as receiving refined product,” he said.

And there’s interest from Alberta, too, he added.

“I can honestly say I’ve never ceased talking with people from Alberta – investors and CEOs – since the days I was in Alberta about the challenges of a unique product, but a product that in my view needs to be refined and needs to be refined here,” he said.

“Of course, you have to make the economic case as well as the environmental case and this project does that.”

Day said he hasn’t talked to his former colleagues in Ottawa about Pacific Future, but “I have to think this would align with many of the aspirations of the federal government vis-a-vis Canadian trade and Canadian jobs.”

The Pacific Future leadership team includes venture capitalists and former provincial and federal government advisers. Its executive chairman, Samer Salameh, has experience financing and building telecommunications infrastructure for Mexican conglomerate Groupo Salinas.

Pacific Future has also made First Nations engagement a priority. One of Salameh’s first hires for the management team was Jeffrey Copenace, who was deputy chief of staff to former Assembly of First Nations chief Shawn Atleo and has worked with the Ontario and federal government on aboriginal issues.

Pacific Future says the refinery will be built in 200,000-barrel-per-day modules, with the ability to expand to a total of one million barrels per day.

It aims to pick a location later this year for the plant and begin the regulatory process next year.

Lauren Krugel Published Thursday, Aug. 21 2014

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Ewart: Day joins firm with bold B.C. refinery plan – Calgary Herald

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Stephen Ewart, Calgary Herald 08.21.2014

Former Alberta and federal cabinet minister Stockwell Day says he’s not a “trophy in the window” or a conduit to government investment in his new role with an upstart company proposing an ambitious oil refinery project on the B.C. coast.

And ambitious is a polite way of saying risky – possibly foolhardy.

Day was announced Thursday as a senior adviser and board member for Pacific Future Energy Corp., a little over two months after the Vancouverbased enterprise revealed its $10-billion plan to refine bitumen from Alberta’s oilsands on the West Coast and ship refined petroleum products to Asia.

The high-profile appointment came as Pacific Future prepares for a second round of funding commitments from private investors to build what would be among the most complex oil refineries in the world and one of the first constructed in Canada in three decades.

Day is adamant the company isn’t looking for taxpayer money.

“One of the attractive elements for me is that they’re not looking for that (government funds). That might have given me some pause,” he said in an interview from Vancouver. “We are presenting it to investors as stand-alone without government financial aid.”

Pacific Future announced plans in June for a 200,000-barrel-a-day refinery – expandable to 1 million barrels – for the northern B.C. coast two years after Kitimat Clean Ltd. had proposed a $32 billion, 550,000-barrel-a-day refinery project in the area. A smaller refinery is proposed by aboriginal businessman Calvin Helin.

The companies have promoted their projects as a solution to the fears of B.C. residents about the impact on the coastal environment and economies from a spill of heavy oilsands crude. Their premise is refined petroleum will evaporate more quickly in the ocean. Offshore oil spills are a major concern for opponents of the two proposed pipelines – Northern Gateway and Trans Mountain expansion – across B.C. to tidewater and Pacific Rim markets for growing volumes of Canadian oil.

The industry has historically sold unrefined crude internationally rather than products such as gasoline. Nonetheless, Pacific Future pledged to build the world’s “greenest” refinery, echoing a promise of B.C. Premier Christy Clark to develop the world’s “greenest” LNG industry in the province.

Energy and politics are inseparable these days in Canada and Day – a former Alberta treasurer and president of the federal government’s Treasury Board – can bridge the two worlds.

A fiscal conservative who represented Red Deer North for the Tories provincially and B.C.’s Okanagan-Coquihalla riding federally, Day left politics after 25 years in 2011. Pacific Future said he offers “a unique vantage point” on the sometimes testy political relations between British Columbia, Alberta and Ottawa over the risks and rewards of energy development.

Pacific Future, under executive chairman Samer Salameh, understands that dynamic.

“They told me my profile would be helpful along with the experience that goes with it,” said Day.

The challenges of an industry that even the Canadian Fuels Association acknowledged in December is “low return, low growth, capital intensive, politically sensitive and environmentally uncertain” helps explain the lack of new refineries in recent decades.

Day contends he’s optimistic “the stars are aligning nicely for the economic case to be made.”

Kitimat Clean, led by newspaper magnate David Black, has asked Ottawa for a loan guarantee on part of its costs but Pacific Futures isn’t contemplating such a request.

Day wouldn’t rule out an oilsupply agreement similar to what the Alberta government signed with North West Redwater Partnership building 50,000-barrel-per-day upgrader and refinery near Edmonton that’s been hurt by cost-overruns.

In 2009, Irving Oil shelved a 300,000-barrel-a-day expansion of its refinery in Saint John, N.B., because it wasn’t economically viable.

In its 2013 World Oil Outlook, the Organization of Petroleum Exporting Countries forecast “a challenging environment for North American refiners through 2035.”

Day said he is “cautiously optimistic” on securing the required funding for the multi-year project that will see its first engineers arrive from Europe this month. The company has said it wants to select a refinery site before the end of the year and could initiate the regulatory process in 2015.

There’s a lot of heavy lifting before shovels break ground and Day said project timelines won’t supersede the commitment to consult with First Nations.

“Timelines are important to investors and we’ve made it clear to investors these will only be achieved with full, responsible and proper engagement on the aboriginal side,” he said.

Day is in the process of putting together an external advisory board – he wants a half-dozen “diverse, eminently qualified experts” – to provide Pacific Futures with arms-length advice on challenges from aboriginal relations to developing markets overseas.

He promised the advisory board members won’t be “just trophies in the window” but will add valuable insight.

Day is the first person associated with the B.C. refineries I’ve heard talk about the economic drivers – versus the environmental advantages or strategic imperatives for Canada – so he’s already moved beyond window dressing and is actually getting down to business.

Steph en Ewart is a Calgary Herald columnist sewart@calgaryherald.com

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Stockwell Day joins push for $10B B.C. oil refinery to resolve his ‘irritation’ over dependence on U.S. – Financial Post

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Claudia Cattaneo | August 21, 2014 12:06 PM ET

Proponents of controversial energy projects seem to be putting increasing value on the bare-knuckle experience gained in politics to help manage potentially conflicting industry, community, aboriginal and environmental interests.

Stockwell Day, the former federal international trade minister and former Alberta treasurer, has joined the management team of Pacific Future Energy Corp. as a senior advisor, director, and chair of the company’s advisory committee. The Vancouver-based company backed by Mexico’s Grupo Salinas is proposing a $10-billion refinery on British Columbia’s North Coast.

He follows on the path of Jim Prentice, the former federal cabinet minister who was recruited earlier this year to win aboriginal support for Enbridge Inc.’s Northern Gateway pipeline through northern British Columbia. Mr. Prentice left the assignment mid-way to run for Alberta premier.

TransCanada Corp. has tapped Phil Fontaine, the former national chief of the Assembly of First Nations, as a consultant to win aboriginal support for its Energy East pipeline project.

And while not a private sector recruit, Gary Doer, Canada’s ambassador to the United States and the former premier of Manitoba, has emerged as a top spokesman for the Keystone XL oil sands pipeline, prioritized by Canada and proposed by TransCanada Corp., in the face of often below-the-belt opposition in the United States.

Mr. Day said he took the assignment because the refinery has the potential to be “an exciting legacy project for Canada.”

“The principals of the company advised me, when they contacted me, that they liked the fact that I had Alberta experience as minister of finance,” Mr. Day said in an interview Thursday.

“I am acutely aware of the unique challenges of the industry there. They like the experience I brought to the table as president of the Treasury board federally, which involves understanding the regulatory process, and the added blend of minister of international trade, which brought me in close contact with the needs that are relevant in Asia.”

The Pacific Energy project addresses challenges facing the transportation of Alberta’s oil sands oil to the B.C. coast and in the ocean, he said.

The refinery would be built in partnership with First Nations in the Prince Rupert area, be the world’s greenest by using advanced European refining technology, capture and store greenhouse gases.

It would take bitumen from Canada’s oil sands and process it into gasoline, diesel, kerosene and other products that would be less harmful to the environment if there is a spill, and create lots of high-tech refinery jobs in the province.

“It deals with what has been a constant irritation to me, the fact that our Canadian [oil] product, 99% of it goes straight to the U.S., which is becoming a diminishing market as they approach self-sufficiency,” Mr. Day said. “It’s time to open up these other markets.”
Peter J. Thompson/National Post, file
Peter J. Thompson/National Post, fileMr. Day said he took the assignment because the refinery has the potential to be “an exciting legacy project for Canada.”

The plan was unveiled in June by executive chairman Samer Salameh, who is also the head of telecommunications businesses and new business development for Grupo Salinas, a large conglomerate based in Mexico owned by billionaire Ricardo Salinas with more than 100,000 employees and operations in 11 countries.

“We are very excited to have Mr. Day join our team,” said Mr. Salameh said in a statement. “Our project office is now up and running at a robust pace. Our goal is to finalize the refinery site by the end of 2014. We expect to enter into the regulatory process in 2015.”

It’s one of a handful of projects proposed so far – including Northern Gateway and Kinder Morgan’s TransMountain pipeline expansion — to link growing production from the oil sands in Alberta to consumers in Asia.

British Columbians have shown scant enthusiasm for the plans, which they fear present too much environmental risk and too little economic reward.

Mr. Day said he agrees with B.C.’s view that “there should not be a carte blanche acceptance to an energy proposal until it meets certain conditions.”

That is why he believes the Pacific Future proposal is well placed.

“It addresses the issues that are properly raised by our indigenous people,” he said. “It addresses environmental concerns about raw bitumen hitting our coast line, and it addresses the economic issues of the value added opportunities being created here in B.C. for decades to come — It’s a trifecta of interests that wind up being beneficial to everybody concerned.”

A politician couldn’t have said it better — but Mr. Day, 64, said he has no plans to return to politics. He also doesn’t envision government support for the refinery “at this point.”

“We have to show, regardless of what a government may do, that the economic fundamentals are in place for a standalone project and we believe we can make that case,” he said.

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Is This $10 Billion Project the Key to Unlocking Canada’s Oil Riches?

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By Matt DiLallo – June 16, 2014

Although Canada has the world’s third-largest oil reserves, it’s having trouble getting that oil out. Not only are the oil sands expensive to extract, but getting the oil out of Alberta and to customers is proving to be an even more difficult venture.

Pipeline projects like TransCanada’s (TSX: TRP)(NYSE: TRP) Keystone XL project, Enbridge’s (TSX: ENB)(NYSE: ENB) Northern Gateway, and Kinder Morgan Energy Partners’ (NYSE: KMP) Trans Mountain are all facing opposition. However, that opposition could begin to fade away if a proposed $10 billion refinery is built in British Columbia.

Laundry list of concerns

Environmentalists have long been opposed to the development of the oil sands. The oil there has a larger carbon footprint than conventional oil, and its physical footprint is also rather large when it’s mined. Then, of course, diluted bitumen is tougher to clean up than traditional oil when spilled. It’s reasons like these that are fueling opposition to pipeline projects that will take the oil from Alberta to customers in the U.S. and Asia.

The projects from Enbridge and Kinder Morgan Energy Partners in particular have the added environmental issue that the oil would be shipped by boat through sensitive coastal waters before heading to Asia. The concern here is that an oil spill would have a devastating effect on the livelihood of those living along the coast, and it is one that the recently formed company Pacific Future Energy would like to address.

How it helps

The company is proposing to build a $10 billion oil sands refinery in British Columbia. It would be the world’s greenest refinery, as it would use advanced European refining technology. It would take the bitumen and turn it into gasoline, diesel, kerosene, and other products that would cause less harm to the environment if spilled. The company could then export these refined products to Asia instead of the oil, which would yield higher revenue than just shipping the oil.

This project is among a number of refinery projects that are on the drawing board for western Canada so it’s not a sure thing at this point. In addition, the $10 billion price tag is just for the first phase of development to build the initial capacity of 200,000 barrels per day. Each additional phase would cost another $6 billion for 200,000 barrels per day of capacity, with the plan to eventually process one million barrels per day. However, this project and others like it are being proposed with the hope that refining the oil first would ease some of the environmental concerns that many have with shipping bitumen overseas.

By reducing the opposition to pipeline projects it also would help to remove the lid on the price of oil in western Canada, which is forcing producers to ship it by rail. Because rail is a more expensive option, it’s slowing down the growth of oil sands production. In fact, these high costs recently put the brakes on one major oil sands mining project as the partners on that project just didn’t see enough takeaway capacity coming online to bring the price of oil up to the point where the project could earn a compelling return.

The only way Canada will be able to unlock the full value of its oil sands is to be able to more freely move that oil from Alberta to customers around the world. While rail is helping in the short term, it’s a much more expensive, and potentially riskier, method of transportation.

The bottom line is that refineries like the one proposed by Pacific Future Energy could very well be the key to unlocking Canada’s oil riches. These projects could help end the opposition to pipeline projects from Enbridge and Kinder Morgan that have been holding back the free flow of oil.

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