Oil Sands Crude Refinery Planned for Canada's Pacific Coast

A Vancouver-based company said on Tuesday it was planning to build a C$10 billion oil refinery on the north-west coast of British Columbia that could eventually process up to 1 million barrels per day of oil sands bitumen.

Pacific Energy Future Corp, which was set up in January, is looking at three potential building sites in Prince Rupert, BC.

The project is the second new refinery proposed for Canada's west coast to process the large quantities of crude oil coming out of Alberta's oil sands and export the refined products.

Pacific Energy Future Corp Executive Chairman Samer Salameh said the refinery could be producing products such as gasoline and diesel in about seven years.

The announcement comes a week before a federal government decision on whether to approve Enbridge Inc plans to build a 525,000 bpd pipeline from the oil sands to Kitimat, BC, where crude would be loaded on to supertankers and shipped to international markets.

That project, known as Northern Gateway, has run into fierce opposition from environmental and First Nations indigenous groups who say the risk of a crude oil spill is too great.

"While we believe it's in Canada's national strategic interest to gain access to international markets for Alberta's oil, especially the fast growing Asian market, the company believes it shouldn't be done at the sacrifice of BC's coast or broader environment and must be done in full partnership with First Nations," Pacific Energy Future Corp said in a statement.

The company is currently running a pre-feasibility study that will take around 12 months and involve initial design work and conversations with First Nations and provincial and federal governments in preparation for starting a joint review process.

Salameh said he expected it would take roughly three years to obtain permits to build the refinery.

Pacific Energy Future Corp has funding in place for the first year and a half that will take it through to the start of joint review process, and then will aim to raise more capital from Canadian and international investors.

In its initial phase the refinery will process 200,000 bpd, with eventual capacity of up to 1 million bpd planned.

Opponents of the Enbridge Northern Gateway plan said refining oil sands crude before shipping it by tanker did not eliminate environmental risks.

"The people of BC and over 130 First Nations have made their stance very clear. They do not want tar sands in liquid or refined form coming through their traditional territories because of the risk to their communities and the environment," said Mike Hudema, an energy campaigner with Greenpeace.

Canadian newspaper mogul David Black is also pushing ahead with a $27 billion plan to build a 550,000 bpd plant in Kitimat.

Salameh said he was not worried about Pacific Energy Future Corp's refinery having to compete with Black's refinery for crude feedstock.

"I will eat my hat if he gets his refinery built before us," he said.

(By Nia Williams, Editing by Andrew Hay)