About that refinery…

When Quantum Energy, Inc. and its wholly-owned subsidiary, Dominion Energy Processing Group, Inc., announced a refinery was coming to Stoughton, we were admittedly slow to catch wind of it. Thus, Pipeline Newsdidn’t attend public meetings in Stoughton. But we did make it to a potential contractors meeting in Weyburn February 15, 2017, and a meeting with Estevan city council and Chamber of Commerce on March 21, 2017. Between those two meetings, on March 6, 2017, Quantum filed its S-1 Registration Statement with the Securities and Exchange Commission.

That lengthy document made for some very, very interesting reading, and some very late nights looking into Quantum. The obvious question was, is this legit? Are they actually going to build a refinery? Do they have the wherewithal and the funding to do it?

Starting at the very beginning of the S-1 was the company’s address for the its corporate head office. Entering that into Google Maps, and then using Streetview, one found a very impressive looking building. It had Microsoft, KPMG and MetLife signs all over it. Fancy Schmancy.

But then we found that a whole bunch of other companies listed the exact same address. That’s because that address, 60 East Rio Salado Parkway, Suite 900, Tempe, Arizona, is a virtual office space that you can book, by the day or by the hour, through an app. Consider it an Uber for offices.

You might think the stories in this edition fixate on this one point a little too much. The reason it was significant is that the company was talking a good talk at meetings all throughout southeast Saskatchewan, but couldn’t, or wouldn’t, even have a permanent office. Yet it was proposing a $600 million refinery.

At the very same time, Husky Energy was also proposing an asphalt refinery for Lloydminster. The company already has one there, as well as an upgrader. For many years, Husky was the largest oil producer in Saskatchewan until it was overtaken by Crescent Point, so they have legitimacy. They have an office tower in downtown Calgary that they presumably don’t rent by the hour. And that office tower has all sorts of people working for them.

Quantum’s S-1 said it had one singular employee, who was its chair, CEO, and sole director at the time. He was also the only guy authorized to sell its stock. When we’ve asked about this, various people involved with it have said they can hire all the help they need. But to this date, we’ve not seen a single-person company build a substantial battery, let alone a refinery.

The number of people they said it would take to build this refinery didn’t make sense – 200 at a time. Having been to the Regina refinery when it had an expansion that was completed in 2012, the workforce was in the thousands. And it cost $2.66 billion.

The Sturgeon Refinery near Edmonton is just finishing up, and started in 2011. That 50,000 bpd facility had a peak construction workforce of 8,000 people, And it cost $9.3 billion as of June 29, 2017, according to JWN Energy.

Did we mention that Quantum had already proposed five, yes, five refineries at various points in Montana and North Dakota, before coming to Stoughton, and not one has been built?

Quantum’s front man, Keith Stemler, who is no longer with them, apparently, also spoke of carbon capture on this facility. We have some experience with that in Estevan. A carbon capture facility added $1 billion for just one generating unit at Boundary Dam Power Station. Now, perhaps there are other ways carbon capture can be done through the refining process as opposed to post-combustion capture, but no matter what, it’s not likely to be cheap.

There were a lot of other things that didn’t make sense, but since we couldn’t substantiate them, they did not see print.

We put together a lengthy list of points we were concerned about, and sent them to a select few people, all with extensive business experience and much smarter than a lowly writer. All those people said we were onto something, and something wasn’t right.

At the Estevan meeting, Pipeline Newsput Stemler through the wringer on many of these points. The next day, an Estevan city councillor tore a strip off us for doing so, i.e. asking hard questions. We pointed out to this councillor that he did not ask hard questions, himself.

We waited over a year to see what, if anything has happened? So, what did? Stemler, CEO of Dominion and the front man in this neck of the woods, is gone. The CEO, Stanley F. Wilson, is also gone. The company has shaken up its share structure. The Ministry of Environment told us they have not heard from Quantum or Dominion in over a year. They haven’t applied for one permit, and they need 12 different forms of permits and approvals, according to the Ministry. Crescent Point Energy, without whom any project of this scale would have a very tough time without them on board, has “had no contact with the proponents of the project for a long time now.”

Could the Stoughton refinery still happen? Perhaps. But maybe we should ask East Fairview, N.D., Baker, Mont., Billings, Mont., Stanley, N.D. or Berthold, N.D., how their Quantum refineries have panned out.