Building a refinery on B.C.’s coast would be economically advantageous and should be considered seriously, according to a new Navigant Consulting report prepared for the Government of British Columbia.
The government commissioned Navigant to prepare a technical review to estimate the economic impacts of the refinery and to assess the Asian fuel supply–demand balance. This involved examining whether the output from Kitimat would be sold profitably to customers in:
- China;
- India;
- South Korea; and
- Japan.
Navigant found that the Kitmat refinery would provide “incremental long-term economic benefits to the region.”
“If configured carefully and managed properly, the refinery would create sustainable margins that otherwise would be lost to Asian purchasers of Canada’s oil sands production,” the report states.
Newspaper baron David Black announced last week that he had secured $25 billion in funding for his planned Kitimat oil refinery, which would be located 25 kilometres north of Kitimat and would be one of the biggest facilities of its kind in the world.
Navigant estimated the cost of building the refinery and determined that it would exceed $7 billion. In calculating this, it examined many economic factors involved in building the refinery, including labour and capital equipment, and compared the cost against a similar project built in the U.S. in 2006. Kitimat Clean Fuels (KC) has estimated the cost of the refinery at about $16 billion, which Navigant said is “on the high side.”
The consultants found that KC’s refinery configuration plans, which involve a combination of hydrocracking and delayed coking to process oil sands from Alberta into various clean fuels, are technically sound.
“This particular configuration is well-proven and widely employed in many locations around the world,” the report states.
