‘Big win’ to come in form of refinery upgrades: McKenna
Former New Brunswick premier Frank McKenna says “the big win” for New Brunswick isn’t the massive west-east pipeline megaproject proposed to traverse the province and reach Saint John, but instead the refinery upgrades that will follow.
The deputy chairman of TD Bank says he has already pitched the idea to construct multibillion-dollar facilities to sit next to the Irving Oil refinery to industry officials in Alberta, a “very realistic” opportunity McKenna contends now that TransCanada’s decision to build a pipeline to bring Alberta crude to eastern refineries is pushing ahead.
“My prediction is that as market conditions dictate we will see an increased level of investment at the refinery in Saint John that hopefully at some stage will lead all the way to the equivalent of another refinery,” McKenna said in an interview with the Telegraph-Journal on Tuesday. “Just getting the pipeline to Saint John will create a lot of jobs, but it really opens the door to much larger opportunities.
“The marine terminal between TransCanada and the Irvings is one of those, but I think that is a very small opportunity compared to the large opportunity of seeing other forms of value add taking place at that Saint John refinery.”
McKenna added: “From the very beginning, I have been of the view that the big win for New Brunswick is the thousands and thousands of jobs that would be created if we get into upgrading the Saint John refinery.”
TransCanada has determined there is enough commercial demand to apply for regulatory approval to convert an existing 3,000-kilometre natural gas pipeline to carry crude into Quebec and build a 1,400-kilometre extension to the Port City.
The Calgary-based pipeline company has also announced that it has partnered with Irving Oil in a joint venture to build, own and operate a new deepwater marine terminal – a $300-million project that will in itself generate hundreds of construction jobs, coinciding with the building of the pipeline project coined Energy East.
Paul Browning, Irving Oil’s president and CEO, said last week that the new source of crude would create opportunities beyond the new marine facility, but declined to elaborate.
“We are in the process of evaluating our options on other investments we might make in the future,” he said. “There is going to be a lot of opportunity to invest in Saint John.”
The moves have led to speculation that Irving Oil would eventually construct an upgrader and coker at its Saint John facility, two value-added projects that would result in an investment of $5 billion a piece.
McKenna said an upgrader alone would create up to 5,000 construction jobs a year for a decade, the opportunity already pitched to industry players.
“When we started preaching in Alberta that upgrading facilities could be built in Saint John for as much as 40 per cent less than they could in Alberta, I think it started getting some attention,” McKenna said.
McKenna said constraints are holding back these projects from moving ahead next to the oilsands, while those same factors are alleviated in New Brunswick.
“There are a number of constraints in Alberta,” he said. “There is the labour constraint and the high rate of inflation, but also the difficulty in getting large modular units for construction into Alberta.
“Saint John has the opportunity of floating large modules in, it has pre-cleared sites, it has existing infrastructure, a labour force that would be less inflationary, it has marvellous attributes.”
McKenna said investment in the refinery will now push ahead with a reliable oil supply planned.
“What I foresee is that there will be no end to continuing capital investment around the refinery in Saint John as a result of having this feedstock,” McKenna said. “Whether that is the big project, the upgrader, or a series of smaller ones, I can’t predict, it will be up to market conditions.
“I think now that people realize the capacity that is being planned here, I think more and more knowledgeable people are looking at this opportunity as being very realistic.”