ST. JOHN'S, N.L. — The future of the Come By Chance refinery is in question after the tentative deal to acquire the refinery by Irving Oil has fallen through.
"The agreement with NARL Holdings US LP for the purchase of the business commonly referred to as North Atlantic Refinery Limited has been terminated," confirmed Irving in a statement Tuesday morning.
"Confidentiality provisions of the agreement prohibit Irving Oil from commenting further at this time."
The refinery is owned by New York-based Silverpeak, which describes itself as an "alternative investment management firm" on the company website.
Newfoundland and Labrador Industry, Energy and Technology Minister Andrew Parsons says Silverpeak is continuing to look at its options for the facility.
“This is a difficult, uncertain time for the workers at the refinery. The owner, Silverpeak, has invested substantially in the refinery, which is an asset for the province,” Parsons said in a statement.
“Silverpeak continues to work on its options. We have been talking with them regularly and we will support them as we can. The refinery is important to the people of the province.”
A spokesperson for North Atlantic Refining Ltd. said the company would not comment on “internal, confidential matters at this time.”
In a statement, Premier Andrew Furey says the refinery is “an asset to this province, and one our government will maximize,” and echoed Parsons, saying the company is continuing to pursue options.
The refinery is a major employer in the Placentia Bay region, with at least 500 jobs in the surrounding area. The refinery processes approximately 135,000 barrels of oil per day.
Locals shocked
Clarenville Mayor Frazer Russell could only think of one word to describe his reaction to the news about the closure of the Come By Chance refinery.
“Shocked.”
“Jeez, I couldn’t believe what I was hearing," Russell told SaltWire Network about an hour after hearing the news.
Clarenville is just a half-hour drive west of the refinery, and many families from the town, and the region, rely on the refinery for well-paying jobs, Russell said.
“And a number of companies from the town also do business, supplying goods and services there.”
He said the closure of the refinery “will have a devastating impact on the whole Clarenville area.
“It’s a major employer paying very good wages … and then … the spinoff for the region.”
Russell added the weeks of silence after the refinery owner announced it was in negotiations with New Brunswick-based Irving Oil was making people uneasy.
The mayor said people are now hungry for information.
“Everybody's talking about it. Everybody here is pretty worried. It's a shock, for sure." — Jeanette Pitcher
The big question, he said, is whether the current owner will seek another buyer.
He hates to think of the alternative.
The refinery was closed for several years in the 1980s and its owner at the time, Petro-Canada, had planned to dismantle the facility.
It was partly due to a concerted lobbying effort of local town councils, and the Come By Chance town council in particular, that the wrecking balls didn’t move in.
Russell and other members of the town council will meet with a consultant to begin developing a new 10-year town plan.
The mayor acknowledged the discussion around the 10-year plan will have a much more sombre tone than they could have imagined.
My heart goes out to the workers and families affected by the closing of the Come By Chance Oil Refinery, with the loss of at least 500 direct jobs.
— Ches Crosbie (@ChesCrosbie) October 5, 2020
The people of our province deserve meaningful employment, and we cannot settle for anything less. #nlpoli pic.twitter.com/WqZSOnfqLS
The bigger question on their minds now is what will happen to the industry that is a crucial part of the local economy.
“We’re all scrambling now for information,” said Russell.
Some answers may come in meetings planned for the union membership on Tuesday.
Perry Feltham, vice-president of the United Steelworkers Local 9316, would offer no comment when contacted by SaltWire.
He said only that the union’s legal department advised against offering any comment right now.
It didn't take long for word to get around.
“Everybody's talking about it," said Jeanette Pitcher at Pitcher's Ultramar in Arnold's Cove. "Everybody here is pretty worried. It's a shock, for sure."
Long history
The refinery was opened in 1973 by entrepreneur John Shaheen’s Shaheen Resources. The financing of the refinery was met with scrutiny for then-premier Joey Smallwood and resulted in the resignations of future-premier Clyde Wells and future MP John Crosbie. The refinery closed in 1976 after the company went bankrupt.
In 1980, the refinery was purchased for $10 million and restarted by Petro-Canada. In 1994, Vitol Group purchased the refinery, and operating company North Atlantic Refining was started.
In 2006, North Atlantic Refining was purchased by Harvest Energy Trust for $1.6 billion. In 2009, the company was purchased by Korea National Oil Corp.
Last May, Silverpeak, which bought the refinery in 2014, and Irving announced their plans for a sale, until Monday’s news that the deal had fallen through.
Potential buyers in the wings?
Irving Oil wasn’t the only company to express interest in purchasing the refinery.
In a June 8 letter to Natural Resources Minister Siobhan Coady, U.S.-based Origin International Inc. stated its intent to pursue a deal to buy the facility.
The company, which is based in Baltimore, Maryland, noted that it had placed a bid in May to acquire all of NARL. It proposed it could put all the employees at the refinery back to work and adapt the refinery operations “to a more environmental, social and governance focused plan.
“The purpose of this letter is to communicate that, in the event the Irving transaction stakeholders deem appropriate an assessment of alternatives to acquire NARL, Origin stands willing and able to re-engage in its bid for NARL,” stated the letter signed by Nicholas Myerson, CEO of Origin International.
Officials of Origin International could not be reached for comment Monday evening.
