Financing found for refinery

Deal poised to be among largest private developments in B.C. history

B.C. 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, but it’s a boost for the project that saw some skepticism from within the oil and gas industry when Black announced the plan last fall.

“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.

“We have verbal commitments on funding the whole project — that’s pipelines, shipping, whatever’s needed.”

Cooke said the investors will sign long-term contracts of 10 to 20 years, but they will not be partners in the project. The refinery and all its accoutrements will be 100 per cent B.C.-owned, he said.

“This is totally debt funding ... debt financing,” Cooke said.

Kitimat Clean Ltd. would include a new oil refinery to be built 25 kilometres north of Kitimat to process 550,000 barrels a day of diluted bitumen from Alberta’s oilsands.

The projected capital cost of the refinery is $16 billion. The plan also includes a $6-billion oil pipeline and a gas pipeline costing $2 billion. It may also incorporate its own new ocean-going tankers at a cost of $1 billion, Black said.

Kitimat Clean still needs buyers, regulatory approval, agreements with First Nations — the list goes on. He hinted in his speech that agreements for the sale of the refined products are also imminent.

Black said the facility could be in service by 2020.