(Reuters) - A Canadian newspaper magnate said he is close to finalizing a C$25 billion ($24.3 billion) financing deal for his proposed West Coast refinery project aimed at creating a new market for Alberta oil sands production, a media report said on Wednesday.
David Black, who announced the project last year, told a business audience in Vancouver he expects to sign a memorandum of understanding with Swiss-based Oppenheimer Investments Group for the proposed plant, which would be located in Kitimat, British Columbia, according to a report in the Vancouver Sun.
The newspaper quoted Richard Cooke, senior managing director of Oppenheimer Investments, as saying the firm had enough investors to fund the whole debt financing. The arrangement would keep all of the ownership within the Canadian province.
The 550,000 barrel a day plant would easily be Canada’s biggest refinery, with a cost of C$16 billion. The rest of the money would go to oil and natural gas pipelines as well as tankers, according to notes from Black’s speech to the British Columbia Chamber of Commerce.
“The refinery will also provide enormous benefits for Alberta and Canada in that it will consume 400,000 barrels per day of heavy oil from Alberta that is in danger of being landlocked,” Black said.
“By changing the North American supply/demand situation this will have the additional positive effect of reducing the C$25 billion per year of existing sales discounts on all Canadian oil exported to U.S. refineries, freeing up more profit and more income tax.”
Black has not built refineries before, which has led to questions among some energy-industry experts about this proposal being completed. His company, Black Press, runs 150 newspapers in Canada and the United States, including the Beacon Journal in Akron, Ohio; the Honolulu Star-Advertiser; and the Advocate in Red Deer, Alberta.
He announced the plan last year against a backdrop of opposition among environmentalists and other British Columbians to Enbridge Inc’s C$6 billion Northern Gateway pipeline, which would transport bitumen from the Alberta oil sands to Kitimat for shipment to Asian markets.
Black said on Wednesday that he has decided on a design by a Calgary company called Expander Energy, which has a new approach to processing heavy oil that reduces greenhouse gas emissions by half compared with his preliminary plan. It also added C$3 billion to the estimated cost.
Reporting by Jeffrey Jones; Editing by Nick Zieminski