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