Apr 12, 2018
The one way B.C. will back down from Trans Mountain fight
ANALYSIS
“Refine it here” is an argument I’ve heard from anti-pipeline activists for years.
Processing heavy Alberta oil sands bitumen in particular into gasoline and other fuels before shipping it on pipelines has been proposed by opponents to Keystone XL and Northern Gateway in the past. Now, British Columbia Green Party Leader Andrew Weaver is floating the possibility of new refining capacity in Alberta as a way of getting his province to quit blocking the $7.4 billion Trans Mountain pipeline expansion project.
“Let’s talk about [refining in Alberta] as a way forward,” Weaver, whose party holds the balance of power in B.C.’s legislature, told BNN on Wednesday. “That is where the jobs are, that is where the economic growth is and that is ultimately what people need: gasoline and oil and jet fuel.”
“They don’t need diluted bitumen,” Weaver said.
There are two problems with his proposal, the first being Alberta has already made substantial recent investments designed to encourage more Alberta-based refining of oil sands bitumen. Last month, the province committed $1 billion over four years to support more investments in petrochemicals, which would involve having more companies use bitumen as an input to produce various plastics.
Alberta set aside the same sum in February for partial upgrading, which would allow oil sands bitumen to be partially processed from its natural peanut butter-like state to something that could flow more easily through a pipeline. Then there is the Sturgeon Refinery, the first new oil sands processing facility to open in Canada since 1984, which was only possible because of roughly $25 billion worth of various supports being provided from the Alberta government over the next 30 years.
Yet Sturgeon’s capacity of roughly 78,000 barrels per day leads us to the second problem with Weaver’s proposal. The expanded capacity of Trans Mountain would be 790,000 barrels per day if the project moves ahead, meaning it would take 10 Sturgeon refineries to process enough oil sands bitumen for only gasoline and other refined fuels to flow through the project.
“Only 30 per cent of Canadian crude oil is processed by Canadian refineries,” notes a report published earlier this week by Canada’s National Energy Board, the regulator’s first-ever look at Canada’s refining industry.
Taken alone, that stat might suggest there is plenty of room for growth in Canada’s refining industry, but Canada is not an island and when viewed against the broader North American energy ecosystem, the case against building more refineries in this country becomes clear.
“The bottom line is we have excess refining capacity around the globe today, including in North America,” John Rhind told me back in 2013 when he was still vice president of heavy oil operations at Shell Canada (he has since become CEO of Energy Safety Canada.) “So it is far more economical to build infrastructure to deliver crude to existing refineries than it is to build new ones.”
“Building new refineries in Canada makes no sense,” Rhind said.
That didn’t stop the “refine it here” argument from being advanced five years ago and it isn’t stopping Weaver from advancing it again today. I look forward to the next time. And the time after that.
