Come By Chance refinery feeling market pressures, but has support of owners: rep
Imperial Oil’s Dartmouth Refinery in Dartmouth, N.S. The refinery and its associated terminals in Atlantic Canada, including one in Corner Brook, are being marketed for potential sale. — Submitted photo courtesy CNW Group and Imperial Oil Ltd.
Workers at an Imperial Oil terminal in Corner Brook are facing an uncertain future, following an announcement the company is looking at selling its Dartmouth refinery.
The company is now marketing the refinery and associated petroleum product terminals, including one in Corner Brook, to potential buyers. At the same time, it is considering alternative use of the refinery site.
Allowing time for offers, a decision on whether or not there will be a sale is expected in the first quarter of 2013.
Approximately 200 employees and 200 contractors are employed at the refinery and its related terminals. Affected terminals are located in Dartmouth, Sydney, Sept-Iles and Cap aux Meules, as well as Corner Brook.
Imperial Oil vice-president Gilles Courtemanche said changes in the marketplace led to the decision to test the waters for potential sale.
Alternative fuels and new regulations for vehicle efficiency have cut into demand for gasoline, he said.
“Gasoline demand in Europe today is lower than it was in 1970,” he said.
Meanwhile, there has been an increase in demand for diesel in target markets across the pond.
In response, refinery staff have been working to extract the maximum amount of diesel and the minimum amount of gasoline from each barrel of crude. Yet the refinery has been losing money and operating below its capacity of 88,000 barrels per day.
“The last few years have been difficult. We’re talking tens of millions of dollars that we couldn’t close,” Courtemanche said.
The situation at Come By Chance
Like the refinery in Dartmouth, the North Atlantic refinery in Come By Chance has been feeling the pressures of the markets.
“Market conditions have been extremely challenging and though there are some signs of improvements, refining margins remain very low,” stated spokeswoman Gloria Warren-Slade.
“We are fortunate to have the commitment of KNOC (Korea National Oil Corp — our owners) to support us in this highly cyclical business,” she said in response to questions from The Telegram.
Calgary-based Harvest Energy bought Come By Chance’s North Atlantic Refining in October 2006. Korea National Oil Corp. took over Harvest in late 2009 in a $4.1-billion deal which included the refinery. Since the takeover, hundreds of millions of dollars have been invested in upgrades at the site.
Loss of refinery no small thing
Imperial Oil’s decision to seek buyers for the Dartmouth refinery comes two months after the provincial government extended a tax break for the refinery for five years.
Nova Scotia Premier Darrell Dexter said he has no regrets providing that relief.
“Anybody who thinks that putting higher taxes in place for the refinery will make it more attractive as an asset for sale is really in la-la land,” he said.
“We have to be concerned as governments about things like energy supply and security and what these things mean when you fail to keep this kind of a key piece of the economy.”
Nova Scotia once had three refineries. If the Imperial Oil facility were to shut down, it would leave the province without any.
What comes next
Courtemanche said at least “a couple of dozen” potential buyers are on a list held by the company. The next steps will be to open dialogue. Some may elect to make non-binding offers, he said, moving to binding offers and then negotiation of final terms for sale — if it gets that far.
Until then, “safe, reliable, environmentally responsible operations remain our key focus,” stated Bruce March, chairman, president and CEO of Imperial Oil.
“This is a difficult decision,” March said of re-evaluating the refinery’s future.
“We recognize the refinery’s long history of supplying customers in this region and we know that these jobs are important to the community.”
Imperial Oil’s Dartmouth refinery started operations in 1918. It produces a variety of products including gasoline, diesel, jet fuel, home heating fuel, marine fuel, heavy fuel oil and asphalt.