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Irving Oil aims higher
Reaches tentative deal to buy Newfoundland refinery, expanding international role by locking up control of sector in Atlantic Canada Gary Park for Petroleum News
Irving Oil, the privately held Canadian energy giant, is within reach of locking up control of Atlantic Canada’s refining business along with adding a “building block” to its plans for ensuring an outlet for Western Canadian heavy crude.
For an unspecified amount, Irving now only needs Canadian government approval - expected within 60 days - to acquire Newfoundland’s Come By Chance refinery, adding another dizzying chapter to that plant’s history.
If the acquisition from New York-based investment firm Silverpeak proceeds, Irving will gain another 135,000 barrels per day of refining capacity on top of its existing 320,000 bpd plant at Saint John, New Brunswick, and 71,000 bpd refinery near Cork, Ireland.
Deal to source crude The deal comes on the heels of Irving obtaining approval from the Canadian Transportation Agency for the company to source Western Canada crude through the Canadian government’s Trans Mountain pipeline to Vancouver’s tanker terminal. From there, foreign-owned, medium-sized tankers will sail down the Pacific Coast, through the Panama Canal and up to Atlantic Canada.
Irving said in a statement the refinery purchase is part of the company’s broader plan to create energy security for its customers and Canada, as well as protecting 400 Newfoundland jobs.
As well as serving customers in its region, Irving hopes to serve buyers in the northeastern United States.
The company said the “two building blocks ... fit together with our existing strengths ... and our long-time objective of helping Canada be even more competitive in the international landscape,” ending the refinery’s reliance on feedstock from the United States, Saudi Arabia, Algeria, Nigeria and Norway.
Seen as ‘rational move’ Michael Ervin, vice president of petroleum consultant Kent Group, said the purchase is a “rational move by Irving” that will give the company more capacity and flexibility to extend its reach into New England markets.
“I think it’s based on a long-term projection that many organizations hold ... that demand for gasoline is going to remain fairly robust over the long term,” he told the Globe and Mail.
“Irving clearly sees the Come By Chance refinery as a long-term player, even as some other refineries might close.”
Ervin said the acquisition has gained value since a fire last summer forced Philadelphia Energy Solutions to permanently close the largest refinery on the Eastern seaboard.
Silverpeak spent C$400 million on improving the Come By Chance refinery’s operations over the past few years, giving fresh hope to a facility that was built between 1970 and 1973 with Canadian and Newfoundland money.
The refinery went bankrupt in 1976 and lay idle until it was acquired by Petro-Canada in 1980 for C$10 million and, unable to turn a profit, was sold to the Canadian government for C$1. Since then the plant has passed through a succession of owners from Switzerland, South Korea, Canada and the United States.
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