On January 25, 2007, Irving Oil announced it is submitting plans to provincial and federal environmental regulatory authorities to build a second oil refinery in Saint John.

This filing is intended to initiate environmental impact assessments required for the project. The proposed new refinery would have a capacity of up to 300,000 barrels per day and be located near the existing Irving Canaport deepwater crude receiving terminal in Saint John.

In June 2004 ( a year before Hurricane Katrina), U.S. Energy Secretary Spencer Abraham told the National Petroleum Council in Washington that "insufficient refining capacity" is a critical energy challenge for the United States. According to Mr. Abraham, U.S. demand for gasoline will increase by some 43 percent by 2025 (notwithstanding Mr. Bush’s recent promise to reduce consumption by 20%) and demand for diesel fuel will increase by 48 percent by that same year.

"We will need 28 million barrels per day of crude oil to meet that demand, he said but our nation's refining capacity is only 21 million barrels per day,"

Environmental standards have limited the ability of the U.S. refining industry to construct new facilities or expand old ones. Refining capacity has dropped by some 50 percent in the past two decades and U.S. refineries operate at near 100 percent capacity. The last new refinery built in that country was in 1976.

The new Irving facility responds to the need for additional refining capacity in the U.S. Northeast. Together with the existing Irving refinery, this new investment would create a combined total production capacity of up to 600,000 barrels per day.

The new refinery would cost an estimated $7 billion; employ 5,000 workers during the construction phase and 1,000 permanent workers thereafter. With the exception of a few conservationists and environmentalists, there seems to be near unanimous support for this project, an enormous investment for New Brunswick - 65% more than the $4.5 billion invested in the makeover of Pearson International Airport in Toronto.

At the risk of being trampled by the refinery enthusiasts, it’s worth noting some realities that could one day cast a shadow over this project. Eighty percent of the existing refinery’s products go to the United States, 100% of the new refinery’s products would go to the United States or Europe. That would make New Brunswick hugely dependent on the United States and the U.S. market for refined oil products.

To process 600,000 barrels of oil a day, Irving would require delivery of crude by the world’s largest tankers every three or four days. Irving’s primary source of crude is Saudi Arabia and the North Sea. Saudi Arabia borders on Iraq and sits across the Persian Gulf from Iran. How reliable will that source of supply be in coming years?

Four or five million barrels of oil traveling the Bay of Fundy every week could be problematic. If a supertanker filled with two million barrels of oil hit a rock or some other immoveable object, the resulting spill could destroy the Bay and all its wildlife for the next millennium.

There is another consideration and I hesitate to raise it but Saint John as a super energy-hub reliant on customers in the United States could become a global terrorist target in the Bush and post-Bush age. At the very least we have to consider that possibility.

In 2005 the Swedish government announced its intention to become the first country in the world to break its dependence on oil and fossil fuels by 2020.

The Swedes cite four reasons for their decision:

1. the impact of high oil prices on economic growth;
2. the link between oil, peace and security;
3. the potential to use Sweden’s own renewable energy resources as oil replacements, and
4. the threats posed by climate change.

The Swedish government created a Commission to make recommendations on how Sweden’s dependency on oil could be broken. Reporting in 2006, the Commission proposed a 40 to 50% reduction in auto/truck consumption of oil-based fuels; a 25 to 40% reduction in the industrial use of oil; elimination of oil as a heating fuel in buildings and a 20% increase in energy use efficiency.

What if such a policy landed in the United States?

Yesterday in Paris, the Intergovernmental Panel on Climate Change, a group of some 2,000 of the world’s top climate scientists pronounced global warming as real “unequivocal as evident in increases in global average air and ocean temperatures, melting sea ice and rising sea levels” - the culprit -fossil fuels and CO² emissions.

Potential of the second Irving oil refinery for New Brunswick goes way beyond construction and operation. What if a condition of Irving’s license to build required that combined total emissions of CO² from the two refineries not exceed the total volume of emissions emitted by the existing refinery?

Development of the technology and equipment to meet that requirement would find instant global demand. What if the refined products produced by the new refinery were required to burn 50% more efficiently than today’s refined products?

What if a condition of license required paradigm changes in environmental protection (triple hulls in tankers, inflatable life rafts/airbags that would contain/recover/absorb oil spills) and advanced security protective technology?

Knee-jerk reactions might dismiss these conditions as uneconomic. A closer look might reveal huge opportunity in the technological development required to meet these requirements. It would be easy to justify major investment by the federal government in a technology partnership with Canada’s single privately owned refiner.

Let’s take advantage of Irving’s willingness to invest $7 billion in the Province by demanding a value-added component(s) that would lead the world in innovative, climate-saving technology development. It might be a good way to get us on the road to self-sufficiency.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com