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 firstname.lastname@example.org