David Black’s Answers to Recent Comments and Questions

Why not put the refinery closer to the source in Alberta?

Unfortunately it cannot be done economically. Firstly, all refineries are built from modules that are constructed in lower wage areas of the world. The refineries would be prohibitively expensive otherwise. Modules transported inland to Alberta would be limited to container-sized loads so they could be transported on trains and trucks. A tidewater location like Kitimat’s allows for the use of huge modules that are considerably less expensive. Secondly, the economy in Northern Alberta is overheated. There are already too many jobs and not enough workers. Northwestern BC is the opposite. It needs more construction jobs and permanent jobs. The difference in the cost of constructing a refinery, from these two factors, is several billion dollars.

Also the shipment of refined product from Alberta would be more expensive. Eight liquid products come from the refinery. Sending them consecutively through one pipeline to get to Kitimat would cause substantial waste.

Why not put the refinery in Prince Rupert?

The heavy oil pipeline would have to run along the Skeena River for one hundred kilometers. It would be confined to a narrow relatively unstable corridor shared by a highway and a railway. There could be a risk of a bitumen spill into a major salmon river.

Also a refinery requires a large fairly flat site with road, railway and pipeline access. The one we are proposing covers four square miles. Space like that is hard to find near Prince Rupert.

Is the Douglas Channel a safe corridor for tankers?

Yes. I have sailed up it myself. The narrowest part is two kilometers wide and the whole route is protected from offshore storm waves. It is deep with no obstructing rocks or reefs.

Is it really safe to ship refined fuels in tankers?

BC has experience with this. In 2007 we had a diesel spill in Johnston Strait near Robson Bight. According to the Vancouver Sun the spill covered seven kilometers at one point. It disappeared in two weeks. No remediation was required. Gasoline and kerosene evaporate even more quickly.

Don’t existing refineries have ecological issues?

Many of them do. The advantage of keeping this refinery ‘in our backyard’ is that it must meet Canada’s current tough emission standards. To the extent it displaces other refineries, the planet will benefit.

Why Are You Doing This At This Time?  Why isn’t the Industry?

I have had an interest in this idea for seven years. We proposed the concept to Canada’s oil companies in 2005 when I chaired the BC Progress Board. I proposed it to the industry again over the last eleven months. Since the economic returns from a refinery are less than are available in other branches of the oil business no company has stepped forward to spearhead the project. I have decided to do so myself. I am hoping to serve as a catalyst to attract an industry consortium that will undertake the project. But if no industry player steps forward during the two years of environmental assessment I will do all that I can to organize the capital and build the refinery. I think the pipeline and the refinery are crucially important to our northern communities, to BC, to Alberta and to Canada. We must protect the environment but we must create jobs for the next generation as well. It is our responsibility to do both.

Are you qualified for this?

I am not an expert on oil refineries but I have a degree in Civil Engineering and an MBA.  I have a wealth of practical business experience in strategic planning, negotiating, budgeting, hiring, and working with financial lenders. And I have an acquaintance with many senior business people and politicians in Canada. During my career I have built from the ground up a fairly large and successful publishing company with 150 newspapers in Canada and the US.

Will your newspapers have a conflict of interest?

We have 60 local newspapers in BC. Among them are the papers in Prince Rupert, Terrace, Kitimat, Smithers, Houston, Burns Lake, and Vanderhoof. The editors of the latter group have quite rightly published a lot of information about the pipeline’s possible effects on their communities. I have not been involved in that coverage to date and I have no reason to become involved in the future.

As a proponent of a new refinery I will have a publishing conflict in Kitimat and Terrace. Editorial credibility is important to us. The editors may write about the new refinery proposal as they see fit. I will not tell them what to say in their news stories or in any of their opinion columns.

Where do the Haisla and Kitselas stand on this?

The Dubose site is in the traditional territory of the Kitselas First Nation. The marine terminal is in the traditional territory of the Haisla First Nation. We have yet to have serious discussions. We remain hopeful that they, and all other communities along the coast, will agree to the proposal after a full and complete review

What about opposition from First Nations along the pipeline?

We know there are many legitimate concerns about the pipeline. In my view we should not proceed with the pipeline (or the refinery) unless there is confidence that any pipeline leakage will be immaterial.

How do you know that refined fuels evaporate and heavy crude does not?

This is basic science.  For a better understanding of various fuels and their characteristics in water, go to www.safewater.org.  This is one of many independent sources available on the internet.

Are refined oil products not toxic?

Yes they are. The refinery does not solve all environmental issues. If there were a terrible accident involving a tanker carrying gasoline for example, the gas could kill shellfish, seaweed and other organisms encountered in the intertidal zone. It would be very serious. But fish would be little affected and the gas would mostly evaporate in two days. Local heavy rainfall would help rinse the shore off in this part of the world and normal life would come back fairly quickly.

Does a refinery emit greenhouse gases?

Yes it does. In this case CO2 gas will be released in BC rather than in China or some other country where the refinery is located. The effect on the planet is the same. The refinery will emit 7 million tons of CO2 per year. The refinery will emit less greenhouse gases of other types than other refineries do.

Are there transportation fuels that do not create greenhouse gas?

Not yet. All organic processing releases CO2. For one rather startling example corn ethanol plants actually emit more CO2 than oil or gas plants do. (As another example every human generates one kilogram of CO2 per day simply by breathing in and out.) We need more research to move as quickly as possible to other fuel systems. I am concerned about the environment, just as most British Columbians are. I worry about pollution and the production of greenhouse gases from fossil fuels, just as most Canadians do. In my opinion though, alternate energy and fuel technology are not advanced enough to replace fossil fuels today.

Can we sequester the CO2 or reduce the impact some other way?

Sequestering is not possible given the geology. The CO2 can be used for a few industrial purposes. For example urea fertilizer is made from CO2 and ammonia. CO2 is also used in fire extinguishers, life jackets, for dry ice and for the fizz in carbonated drinks.

Why develop the oil sands?  Pollution will result.

There is a certain demand for petroleum products around the world as people improve their standard of living. Saudi Arabia and other countries would be only too happy to lose Canada as a competitor. Oil will be produced and refined on the planet whether Canada is involved or not. One day we may be able to do away with oil but that day is not here yet. Canada has always exported its resources. In large part it is how we earn a living. In this case I am proposing we “value add” to get more benefit from our resources.

The refinery will be within a few kilometers of homes. How dangerous is it?

Refineries are located in close proximity to cities and towns all over the world. We will fence the facility and maintain a greenbelt around it. Canada’s standards for preventing air borne emissions are very high. They will be met.

How much water is required to run a refinery?

The water requirements for the refinery will be minimized by using a full recovery and recycle design but a fair amount of fresh water is required. We project a need for about 2,500 cubic meters per hour (375,000 barrels per day) primarily for evaporative loss makeup. Rainwater will be used where possible.

How much waste water will there be?

There will be no waste water from the plant. It will all be recycled. Clean rain and snowmelt runoff will be discharged at times when the amount of rain exceeds the plant’s requirements.

How do you respond to the comments by David Anderson about Enbridge?

David is my neighbor and a good guy but I disagree with him on this.

I have been in contact with Enbridge folks for a year now. They are certainly not cowboys as David labeled them. They are decent Canadians trying to do a good job. They are embarrassed about these leaks and they are rethinking how to make Northern Gateway absolutely safe.

Enbridge isn’t some slippery banana-republic company. It is a big public fully accountable Canadian company. It is the biggest pipeline firm in Canada with 25,000 kilometers of crude oil pipe in the ground. The executives clearly stand behind their mistakes. Kalamazoo cost them $800 million to clean up. They didn’t try to dodge it and they don’t want it to happen again.

Yes we as a public have to be vigilant. We have to set standards that will protect the environment and we have to monitor construction and operations to make sure they are met. But if Enbridge can assure us it will meet our standards we should not be turning away lightly and ignoring a project that can bring much needed employment to the province.

You know, David and I are old men now. We have made our way in life and done well. It doesn’t affect us personally if the pipeline doesn’t go ahead. But there are new generations of British Columbians coming along and they don’t have the advantages we had. We have to build infrastructure and find jobs for our young people. That is our responsibility. And we have to look after the environment. That is also our responsibility. We can do both if we apply ourselves.

Will Adrian Dix agree to this?

I hope so. He has proven to be an excellent politician. Too often though good politicians recognize a parade and try to jump in front of it. I prefer an excellent statesman. One who is prepared to try to lead people in the right direction, not necessarily the popular direction of the moment.

We need to look after our environment and we need to build infrastructure so following generations can have a good quality of life. Look at all that the generations before us did and how we have benefited.

Our generation hasn’t done so well. We are passing on public debt built up on our watch, a lack of jobs, sky high housing prices that we have benefitted from but that will be very tough on our younger people, a forest industry that is depleted, a fishing industry that is depleted, and health and education budgets that are out of control.

These projects can help our young people. If the pipeline can be built safely, a Canadian refinery will make the world’s environment better, not worse. The annual taxes from the refinery and pipeline will reduce the government deficit. The construction jobs will offer 10,000 workers a chance to learn a trade and build a nest egg. There are going to be years of construction work. A person could come, work for a few years with bed and board provided, and build a sizable savings account. He or she could find permanent work in the Kitimat Valley and enjoy the interior forever, or go back perhaps to Vancouver, buy a house and prosper there.

I urge Adrian to become an excellent statesman.

What is the Premier’s position?

We have briefed the Premier and her advisors of course. The concept has a lot in it for BC and it fits the government’s jobs agenda. They haven’t told me their position on it yet.

Can you summarize the refinery processes?

Refineries are big, complex and expensive. This one, with its rail yard and storage tanks will cover ten square kilometers. To give you an idea of complexity it will have over 50,000 valves, hundreds of thousands of miles of pipe and wire, and thousands of instruments and computers to control processing.

Crude oil from the Northern Gateway pipeline is stored in tanks prior to entering the refinery. The tanks have vapour emission controls and earthen berms surrounding them to contain any spills. Due to its size, the refinery has two identical processing lines, or ‘trains’. Unlike most refineries these trains feature delayed coking to convert heavy bitumen into lighter fuels, and hydrocracking to further increase yields and reduce emissions.

After primary processing, the fuel products are temporarily stored on site and blended to market specifications. They are then piped to a marine terminal and stored in finish tanks prior to being loaded aboard tankers.

Water, probably from wells beside the Kitimat River, is heated in a natural gas cogeneration plant to generate steam. Steam is used to heat the feed in the various process units so that the crude oil can be separated into commercial products. It is also used to create hydrogen for the hydro desulphurization units and the hydrocracker and to produce electric power. Cold water and cold air are used to cool the oil products as required. Other water handling facilities provide for the collection, treatment and recycling of wastewater, rainwater and snow melt.

The block flow diagram of each of the processing trains is shown in the attached drawing. Diluted bitumen is processed in an Atmospheric Distillation and Recovery Unit where the diluent is recovered and returned to the Northern Gateway Diluent Pipeline. Gases obtained from the Atmospheric Distillation include methane, ethane, propane and butane. These are processed in a series of Light End Units. Methane and ethane are used for fuel within the refinery. Propane is sold locally and butane is mixed with gasoline to increase its octane.

Naphtha liquids obtained from the Atmospheric Distillation are sent to the Naphtha Hydro-Desulphurization (HDS) Unit, then the lighter portion is processed in a combination Benzene Saturation/Isomerization Unit and the heavier part is processed in a Heavy Naphtha Reforming Unit. These facilities turn the Naphtha liquids into gasoline.

Distillate liquids, such as kerosene and diesel, obtained from the Atmospheric Distillation are sent to the Distillate Hydro-Desulphurization (HDS) Unit for removal of sulphur and other impurities, and then to finish tanks.

The residuum left over from the Atmospheric Distillation is sent to the Vacuum Distillation Unit to distill out additional liquids. The liquid gasoils from this are moved on to the Hydrocracker Unit which uses hydrogen to upgrade the heavier gasoils to lighter, more valuable products. The residuum left over from the Vacuum Distillation Unit is sent to the Delayed Coking Unit where it is thermally cracked into lighter gases and liquids. These light fuels are once again processed in the HDS Units and the Hydrocracker Unit to make fuel products.

The residuum from the Delayed Coking Unit is solid petroleum coke which is exported for fuel at steel mills and other furnaces. Sulphur stripped out at the HDS units is converted in a high efficiency sulphur processing unit to a solid. These byproducts are moved to the docks by rail for shipping overseas.