Multiple suitors for Dartmouth Refinery

October 3, 2012 – 6:07pm By BRETT BUNDALE Business Reporter

Imperial Oil Ltd.’s nearly century-old Dartmouth refinery has attracted several prospective buyers after five months on the market, the petroleum giant’s chief executive officer said Tuesday.

The aging refinery was put on the auction block in May amid sagging demand for refined products, stiff competition and soaring input costs.

Bruce March, Imperial Oil’s CEO, told reporters in Calgary about the continuing sales process.

“We’ve been through a non-binding phase, looking to identify potential interested acquiring parties,” Reuters quoted March as saying.

“We’ve entered a binding phase, and we’ve got multiple parties that are interested.”

Pius Rolheiser, a spokesman for Imperial Oil in Calgary, said in an email that the company is “continuing to work through the process of evaluating options for the Dartmouth refinery’s future.

“The details of that process, including potential expressions of interest from other parties, are confidential. We expect to announce a decision on the refinery’s future by the first quarter of 2013.”

Roger McKnight, a senior petroleum adviser for En-Pro International of Oshawa, Ont., held out little hope for the 88,000 barrel-a-day refinery.

“As far as the Imperial Oil refinery is concerned, it’s going to be a long wait, and I wouldn’t put much into it,” he said in an interview Wednesday.

“It couldn’t be a major (oil company). It would have to be an independent, and I couldn’t see that happening at all.”

In recent months, unconventional buyers, including airlines and private investment firms, have invested in North Amer-ican refineries.

Indeed, when Imperial Oil announced the sale of the refinery, Gilles Courtemanche, the company’s vice-president of refining and supply, noted that the refinery would be attractive to companies that can find “synergies.”

Delta Air Lines, for example, agreed to buy a refinery near Philadelphia to offset the risk of higher jet fuel prices.

But McKnight said finding a non-traditional buyer to purchase the Dartmouth refinery is unlikely.

Only half the refineries that have hit the auction block in recent years have found buyers.

Royal Dutch Shell plc, for example, made the decision to close its 76-year-old Montreal refinery in 2010. The company rejected two purchase offers it said were too low and instead converted the refinery to a fuel terminal, putting 500 employees out of work.

Imperial Oil also said it would consider converting the Dartmouth refinery to a supply terminal as well as “other alternatives.”

Meanwhile, although the refinery is still operating its closure would put about 200 workers and 200 contractors employed in Dartmouth and related terminals in Sydney, Corner Brook, N.L., and Sept-Iles and Cap-aux-Meules, Que., out of work.

The refinery isn’t unionized, but it does contract out work to firms that hire unionized trades.

“They are still operating and our people are still working there doing repairs or modifications to certain systems,”

said John Kelly, business manager of Local 56 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada.

Although the trades he represents are on contract at the refinery, he said some have worked there for years.

“It will certainly be a disappointment if the refinery closes and some of our workers will feel the crunch because they’ve worked there for several years.”

The refinery, which opened in 1918 at the tail end of the First World War, produces a range of petroleum products, including gasoline, diesel, jet fuel and home heating fuel.

But the refinery operates in the highly competitive Atlantic Basin and has been losing money in recent years due to new efficiency standards, lower demand and the high cost of crude oil.

The Atlantic region is served by four refineries: Imperial Oil in Dartmouth, Irving Oil in Saint John, Ultramar in Quebec City and North Atlantic Refinery in Come by Chance, N.L.

(bbundale@herald.ca)