Petro-Canada closing Ontario refinery

Gary Park

Petroleum News Calgary correspondent

Petro-Canada is shutting down one of its three Canadian refineries � an 80,000 barrel per day plant in Ontario � rather than shoulder the costs of refitting the plant to comply with new federal low-sulfur gasoline standards.

The Calgary-based company said it will take a C$200 million charge in preference to spending up to C$300 million to meet the new sulfur content.

�We have a disadvantaged refinery � that cannot compete effectively in the modern petroleum products business,� Chief Executive Officer Ron Brenneman told a conference call with analysts. The federal government is requiring Canadian refiners to lower their cumulative average to 150 parts per million of sulfur between July 1, 2002, and Dec. 31, 2004, then 30 parts per million, by Jan. 1, 2005.

Canada�s major refiners � Petro-Canada, ExxonMobil subsidiary Imperial Oil and Shell Canada � are spending hundreds of millions of dollars to meet those goals.

Meanwhile, to offset the loss, Petro-Canada will expand output at its Montreal refinery to 130,000 bpd from 110,000 bpd and has signed long-term supply deals for 45,000 bpd with domestic and international suppliers. The Communications, Energy and Paperworkers Union, representing 350 workers who will lose their jobs, accused Petro-Canada of making a �cold-hearted business decision� when its responsibility should have been to �clean up the refinery to meet the new sulfur regulations.�

In addition, Petro-Canada announced plans to sell, close or convert 125 of its retail outlets in Eastern Canada, or about 8 percent of the total in that region.