Kitimat refinery financing close, says Black
www2.canada.com
Dene Moore, The Canadian Press
Published: Thursday, March 07, 2013
British Columbia newspaper mogul David Black says a group of investors has committed financing for his plan to build a $25-billion oil refinery project on the province's northern coast in a deal that would be one of the largest private developments in B.C. history if it goes through.
Black announced in Vancouver on Wednesday he is on the verge of signing a memorandum of understanding in the coming weeks with a consortium of investors.
The deal is for debt financing, not an equity investment, in a project being met with some skepticism from within the oil and gas industry.
How solid is it? I would say it's 100 per cent because in this case, the financiers are very anxious to help get the refined fuels from Canada," Black said in a speech to the Vancouver Chamber of Commerce.
"I'm sure we'll get through to the finish, I'm sure that money will be there."
The consortium of investors was put together by Richard Cooke, senior managing director of Switzerland-based Oppenheimer Investments Group.
"We have the investors together. We have the commitment," Cooke said. "I can't tell you who they are yet but we'll have documents signed in the next 30 days."
Cooke said the investors will not be partners in the project. The refinery and all its accoutrements will be 100 per cent B.C.-owned, he said.
Kitimat Clean Ltd. would include an oil refinery to be built 25 kilometres north of Kitimat, B.C., to process 550,000 barrels a day from Alberta's oil sands.
The projected capital cost of the refinery is $16 billion. The plan also includes a $6-billion oil pipeline and a $2-billion gas pipeline.
It may also incorporate its own ocean-going tankers at a cost of $1 billion, Black said.
The owner of Black Press originally planned the refinery as the terminus of the controversial Enbridge Northern Gateway pipeline, saying he hoped the plan would shift the debate about that project.
Black said he's met with Enbridge officials and is still open to working with them, but he thinks the original Northern Gateway plan likely will have to be reworked or scrapped.
There has been and still is little interest in the oil patch for a refinery, Black said, but oil producers will be happy to sell the oil. The reality of B.C.'s environmental concerns may be the deciding factor.
Kai Li, of UBC's Sauder School of Business, said the announcement means Black will have the money to pursue what would be the largest private development in B.C. history - once the backers have signed on the dotted line.
"It's really a vote of confidence in the oil and gas industry in Canada," Li said. "It's a very big deal. In recent years there's not many acquisitions of that size."
Kitimat Clean will be the first refinery in the world to employ a new refining technology patented by Expander Energy, of Calgary, that should cut greenhouse gas emissions in half, from seven million tonnes of CO2 annually to about 3.5 million tonnes. |
