By Yadullah Hussain | January 26, 2015 5:56 PM ET
TORONTO • The company proposing a $11-billion heavy oil refinery in British Columbia is pushing ahead with the project despite market volatility and is seeking $25-million in financing, according to its chairman, Samer Salameh.
“We are raising $25 million and that would take us to the permitting process, which would take two to three years,” Mr. Salameh, chairman of Pacific Future Energy Corp., said in an interview Monday on the sidelines of a speech to a business audience in Toronto. “We are down to finalizing two sites on the B.C. Coast, and we will be filing for an environmental assessment by the end of this year.”
Mr. Salameh previously managed the U.S. business interests of Mexico’s Carlos Slim, the second-wealthiest investor in the world, according to Forbes magazine. The management team includes Stockwell Day, a former federal minister for the Asia-Pacific Gateway, and Shawn A-in-chut Atleo, a former national chief of the Assembly of First Nations. Mark Marissen, a political strategist and former-husband of B.C. Premier Christy Clark, is also part of the team.
The company has ambitious plans to build the world’s “near net-zero carbon emission facility and the cleanest refinery in the world,” powering it with natural gas and renewable to reduce emissions by 40%. Carbon-capture technology will further reduce emissions by 52%, the company claims.
Mr. Salameh said the technology is “proven,” but admits that it will be the first greenfield refinery of its kind in the world.
The project is hoping to capture “money left on the table” by Canadian producers. Canadian heavy crude benchmark Western Canada Select has been trading at a discount of about $19 per barrel to the U.S. West Texas Intermediate blend over the past five years. Last year, Canadian companies “subsidized” U.S. refiners to the tune of $15.9-billion, Mr. Salameh noted.
“With the first tranche of the refinery is 200,000 barrels per day, [assuming a $30 difference] this project will create $1.7-billion a year, every year for 75 to 100 years.”
Refineries have been the subject of heated discussions in Canada, as most analysts contend the facilities are uneconomic in the country, although labour unions such as the Alberta Federation of Labour believe an integrated upgrader-and-refinery plant “would be highly profitable.”
Suncor Energy Corp. and Total SA abandoned a plan to build a heavy oil refinery project in Alberta in 2013.
“It is a very valid point if the project was being built in Alberta. Nobody has seriously considered building a refinery in B.C.,” Mr. Salameh said. The 200,000-bpd proposed refinery would have cost an additional $4-billion to $5-billion in Alberta due to labour and construction costs, according to the chairman.
Pacific will commission the modules in Asia and ship them to B.C. in a bid to cut costs.
“For a refinery, you are either close to the source, or close to the market. We want to be closer to the market as Tokyo is 10 days away from B.C by ship.”
The proponent believes the project meets B.C.’s five conditions outlined last year by Premier Clark, although the company is not seeking any subsidies from the government.
The five conditions were originally designed for Enbridge Inc.’s Northern Gateway pipeline, but are being used as a template by other proponents seeking to build projects in B.C.
Canadian refineries also face strong competition from new refineries in Asia, many of which are designed to process heavy oil, such as raw bitumen from Canada.
“Clearly, they [Asian customers] would prefer us to ship raw bitumen,” Mr. Salameh said. “But for environmental reasons and resistance from communities, we don’t think that’s the right way to go. But we have not seen any issue in selling our product just because it will be refined.”