About ten days ago, I was having dinner at the home of a good friend. He’s a really smart and interesting guy and we have wonderful conversations and debates. Over dinner he asked me the question: “Why a second oil refinery and why now?” Of course, for me it was like being thrown a lob ball. I explained to him that we have a window of opportunity now with a supply gap in the Northeast US and we want to seize the moment. The window is only going to be open for a short time. Additionally, our community has a shared vision around an energy hub, and we believe that a refinery investment is a foundational investment that will encourage more investments to take place. When we look at our Provincial Government’s goal of Self Sufficiency our company thinks, “What an incredible goal. We are in.” It’s not just about jobs, but about careers for young people that help them decide to stay here, to raise families here, to ultimately create an improved standard of living here. Unfortunately, that was not the answer my friend was looking for.  

 

The concern behind his question was an environmental one, specifically a concern about climate change and greenhouse gas emissions. Our company is absolutely committed to being a part of the solution, and we want to help improve the environmental consequences of our community’s demand for energy. If we look at energy consumption patterns in the Northeastern United States, the percentage of energy we consume in the form of oil is over 50 per cent. Given that share of the energy equation, we shouldn’t let the oil industry off the hook.

 

I really believe, as do my teammates at Irving Oil, that alternative energies like wind and tidal should and can play a very big part in future energy supply. These renewable energy sources will be part of addressing concerns around changing environmental expectations. In our Eider Rock project, we are looking at wind and tidal power and we’re exploring how we can integrate them into a second refinery. We absolutely believe that alternative energies are very important for us to pursue, but when we look at the traditional investments in refining in North America there is a large opportunity. If we look at new refineries in North America, there aren’t any. The last new refinery was built in the late seventies and it was probably built using technology that existed in the seventies or maybe the sixties. New refineries today are being built in growth markets in China, India, and the Middle East.

 

The Eider Rock project is really about trying to determine how we can encourage new investment to take place on this side of the world. How do we attract new capital for new technology that will create efficiencies so that, in the future, when we demand a litre of gasoline in this region, we compare favourably to other parts of the world?

 

Other areas are now using new technology and new capital, and we don’t want to fall behind. No matter how few litres of gasoline we consume in the future, we don’t want that litre of gasoline to emit more carbon than it would in another part of the world. Naturally, I believe very strongly there is a role for an oil company that is committed to the long-term future of the planet and the local community, and I am very proud that our company is pushing very hard on this.

 

New Brunswick is also very uniquely positioned in the environmental performance equation. We have talked about our proximity to an enormous market, which by its nature represents a very attractive economic opportunity: less transportation. This proximity also represents a very significant environmental opportunity. The Hundred Mile Meal is an interesting concept where restaurants offer a meal that was produced within a hundred mile radius of where you are sitting down to eat. When you order that particular item, you can be sure that the produce only had to travel a hundred miles maximum to get to your table. This means less distance, less transportation, and less transportation fuel. The consequences of emissions are less. 

 

New Brunswick is sitting on that opportunity. We have a hundred mile opportunity right now when it comes to energy. There is high demand for energy in the Northeastern United States, and a lot of that energy is being supplied from areas that are far away. New Brunswick has an opportunity that’s not only economic, but also environmental, and we need to fully explore and exploit that opportunity to get energy landed in the Northeast US with less of a carbon footprint than any other potential source of supply. When we consider energy investments, environmental performance factors in extremely high.

 

There is a growing consensus in New Brunswick among government representatives, industry leaders, and community leaders about what really constitutes an energy hub investment. Not every investment qualifies as a good energy hub investment. This consensus is starting to form around at least three key criteria: scale, integration and sequencing.

 

We want to attract world-scale investments to this part of the world. The goal would be that every unit of energy we produce, whether it is a kilowatt of power or a litre of gasoline, would have a cost efficiency landed in the market that’s very competitive, both in good markets and in bad. In our efforts to achieve Self Sufficiency we don’t want to be dependent only on good markets to give us the economic revenue to pay for our schools and hospitals. We also have to be competitive environmentally.

 

There is a growing conscientiousness among all of us when it comes to asking the question: “What is the environmental consequence of my demand?” As consumers become more informed about the environmental impact of their daily behaviour, it is going to be very important that New Brunswick be very competitive on its environmental performance in landing a unit of energy in the market. We need to be not just cost efficient but environmentally efficient, and that is what world-scale investments can bring to us per unit of energy. A number of smaller plants may look more attractive at a plant level, but when you look at the same plant on a per unit of energy demanded by consumers basis, it doesn’t add up to being the most efficient when you consider the global concern for climate change.

 

Secondly, there is the potential for integration; synergies that can exist between one energy project and another. At our refinery, we recently built a power project that replaced a boiler that ran on natural gas and used the gas power to convert water into steam. Now, we take that natural gas and we put it in a turbine to make electricity, and then use the waste heat from that turbine to create steam. In essence, we’re taking one unit of natural gas and getting two forms of energy from it, which naturally has some economic benefits but also has a significant benefit in terms of the environmental or carbon footprint. There are certain foundational investments in an energy hub that will provide not just the economic but also the environmental synergies for a subsequent investment.

 

Thirdly, we want to ensure we sequence investments in the right manner. Certain foundational investments can improve the economics and improve the environmental performance of subsequent investments, so if we are going to realize the full potential of energy investments in the Province of New Brunswick it is very important that we get the sequence right.

 

 

My father and my grandfather before him had responsibilities for building the company that I work in today, and many times when they made decisions to invest here it was against the better judgment of the industry. Quite often, investments such as building Canaport, for example, were not seen by others as good investments.