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Thursday, Jan 21st, 2021

Irving signs purchase agreement for dormant Come By Chance oil refinery

Opposition PCs raise questions about possible sale, and what it might mean for refinery

In another shakeup in the Newfoundland and Labrador oil sector, Irving Oil announced Thursday that it has reached an agreement to purchase the idled refinery at Come By Chance.

In a news release late Thursday morning, New Brunswick-based Irving Oil confirmed it will acquire North Atlantic Refining Corp. from U.S. investment firm Silverpeak, with the deal subject to regulatory review and conditions of sale being met.

The agreement includes the refinery in Placentia Bay, which has the capacity to refine 135,000 barrels per day of oil, and North Atlantic’s network of retail sites and other marketing assets.

“As a family-owned international refining and marketing company based in Atlantic Canada, Irving Oil has proudly served the people of Newfoundland and Labrador since 1950, providing a secure supply of energy to its customers across the province,” states the news release.

This is not new territory for Irving Oil. The company operates Canada’s largest oil refinery, in Saint John.

“Irving Oil would look forward to the opportunity to continue to provide a secure supply of energy to customers across the province,” says the news release.

North Atlantic stopped making fuels in March because of the pandemic, and a resulting collapse in the oil market. Hundreds of workers have been laid off.

‘Care and maintenance’

A source tells CBC News that Irving plans to keep the refinery in “care and maintenance” mode for now.

Irving is describing its recently announced plans to purchase crude oil from Newfoundland’s offshore and western Canada, and the purchase of Come By Chance, as “building blocks” that “contribute to our longtime objective of helping Canada be even more competitive in the international landscape.”

Natural Resources Minister Siobhan Coady said she plans to speak with Irving officials Thursday evening to learn more about the company’s plans.

“We want to make sure the sale does not impact the people of the province, and opportunities in this province,” said Coady.

Coady said Silverpeak “invested significantly” in the refinery, and she praised the company for its work.

“Now we look forward to hearing from Irving their plans,” she said.

North Atlantic is the principal supplier of transportation and heating fuels to the province, and Coady said she’ll be looking for reassurances that supply will be protected.

She’ll also be looking looking to gauge Irving’s plans for the roughly 400 jobs connected to the refinery.

Financial details not known

Coady said she was not aware of the financial details of the deal, noting it is between two private companies, but expects the approval process, including a review by Canada’s competition bureau, will “take some months.”

Newfoundland and Labrador’s Opposition PCs, meanwhile, have concerns about the proposed sale.

“We have heard that Irving Oil was interested in purchasing the facility in the past purely for storage capacity as opposed to operating it as a refinery. This has us extremely concerned about the potential for job losses and a further blow to our economy,” said Conception Bay East–Bell Island MHA David Brazil, who is the Tory critic for natural resources.

Jeff Dwyer,​​​​​​ PC MHA for Placentia West–Bellevue, hopes the refinery will continue to be a major economic driver in his district.

“Ensuring that the refinery continues to be a long-term employer for the region is of the upmost importance,” he said.

“I believe that Irving Oil should provide an update to the people of this area regarding their plans for the facility and related employment.”

A checkered past

It’s yet another chapter for a refinery that has had a checkered past since it opened in the 1970s, including five different owners, an extended closure and a political scandal at the outset.

But prior to the pandemic, the refinery was riding a wave of optimism, with performance and environmental upgrades, and plans for more.

“We are coming from what we call a basket-case refinery to become a refinery of the future,” Thomas Jenke, former CEO at North Atlantic, said prior to his departure late last year.

If approved, the deal will represent another large investment by the Irving family in Newfoundland and Labrador.

Irving Oil Limited is already a powerful player in the retail gasoline market, with a chain of gas stations and restaurants, including its iconic Big Stops. J.D. Irving Limited operates a chain of Kent home improvement stores in the province, and owns Atlantic Towing, a company that operates a fleet of supply vessels in Newfoundland and Labrador’s offshore oil sector.

Meanwhile, North Atlantic provides fuel products to businesses and consumers across the province, and is a major contributor to the province’s economy, with some estimates putting its value to the gross domestic product at three per cent.

It has a deepwater terminal that welcomes oil tankers from around the globe, and a network of retail assets.

Most workers at the refinery are represented by Local 9316 of the United Steelworkers. CBC has requested comment from union president Glenn Nolan.

Source: CBC News | This text was excerpted from the media outlet cited on May 28, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.