At the May 5 Kitimat council meeting top of the bill was a presentation by David Black, the guy proposing to build an oil refinery called Kitimat Clean on land about halfway between Kitimat and Terrace.
At the time of writing he is expected to make the same presentation to Terrace council in the near future.
As one would expect since, despite Kitimat being in the project name, Terrace would likely benefit as much, if not more, than its southern neighbour if it ever came to pass.
I am not going to steal Black’s thunder by repeating everything he told Kitimat council but I do want to zero in on what I see as an interesting contradiction.
For the last several years our oil sands industry has been going on about how Canada was being shortchanged big time because the US refineries had them, so to speak, over a barrel.
While the US happily bought the Albertan crude, knowing there was nowhere else for it to go they were a little mean on what they were prepared to pay.
Industry’s argument was if it could export diluted bitumen (dilbit) to Asia via Northern Gateway’s proposed terminal in Kitimat, then Canada would get full value for the oil sands product.
And that would be in the national interest.
Okay, let’s for the sake of argument accept that they are right.
Then along comes Black with his proposal to build a refinery and ship out not dilbit, but fully refined products.
He says a refinery would create 3,000 direct jobs and the same number again in spinoff industries that would use by-products from the refining process.
That’s a total of 6,000 well paying, permanent jobs compared to the few hundred well paying permanent jobs that Northern Gateway would create.
And all those workers would be paying substantial taxes each and every year to the federal, provincial and even local governments.
Therefore Black’s refinery clearly win hands down when it comes to that national interest, even if it were only half that number of jobs.
So you would think that the crude producers would embrace Black’s idea given their apparent determination that the nation should benefit from the resource.
Not so, he says.
Well perhaps that’s because his numbers on the project’s viability are out to lunch.
Black says that the president of one of the big oil companies actually asked to see Black’s numbers – he had two different consultants crunch them.
After his own people had taken a “hard look” at the numbers, Black says the president told him they agreed with his projections that the project would make a 10 per cent return per annum for years down the road.
Then came the bad news: his company would not be a partner in the project because “it’s not going to make enough for us.”
Note that the president agreed it would make money year after year after year, but his company wanted more.
Hmmm, the first whiff that the oil companies’ interests trump the national interest.
It gets worse.
“Our oil industry does not want to refine,” Black says, pointing out that the parent companies of the Canadian off shoots are based in countries – read the US – that already have their own refineries.
And he pointed out that the US refines “every drop” of Canadian crude it imports and that those refined products are its biggest export.
Now here is the killer: “Three of them (major oil companies) told me directly they will never sell oil to this refinery.”
In other words, national interest be damned.
So here is a suggestion for the federal government: flat out reject the Northern Gateway project or any other export proposal that does not match the value added benefits of a Canadian-based refinery, whether it is Black’s or someone else’s.
That would, after all, be in the national interest that it is supposed to defend.
(David Black is also the chair of Black Press, the owner of The Terrace Standard and other northwestern B.C. newspapers.)
Retired Kitimat Sentinel editor Malcolm Baxter now calls Terrace home.
