Will a buyer be found for Newfoundland’s Come By Chance oil refinery, or will the 47-year-old facility–one of just two refineries in the Maritimes–be mothballed for the last time?
Come By Chance’s owner, New York-based investment firm Silverpeak, is saying little, while layoffs that began in the spring due to the pandemic have seen most of the approximately 500 workers at the refinery lose their jobs. Fewer than 60 workers are left at the facility, which produces gasoline, diesel, jet, and home heating fuel.
Last week, New Brunswick-based Irving Oil walked away from a deal to acquire the refinery. That deal, announced in May, had bolstered the hopes of many in the region, but those hopes are quickly fading as 23 more workers were laid off on Oct. 8.
“You can read the newspapers and you can watch the TV excerpts for comments from both parties, the union and the government,” said David McKelvie, a procurement manager for the refinery, referring to the United Steelworkers Union.
“It’s a pretty sombre mood around here, but other than that I have no comment.”
Newfoundland’s energy minister, Andrew Parsons, said “Silverpeak continues to work on its options,” reiterating that “the refinery and its employees are very important to the province.”
“While the Government of Newfoundland and Labrador is not party to the business-to-business negotiations, we are interested in hearing proposals and are willing to explore potential options to help facilitate a positive outcome,” Parsons wrote in a statement to the paper.
Silverpeak did not return multiple requests for comment, and neither the current owners nor the government answered questions about current operations at the refinery, which has a 130,000-barrels-per-day capacity.
When Irving announced in May that it would acquire the refinery, operations at the plant were reported as “dormant,” and then-energy minister for the province, Siobhan Coady, said Irving intended “to ramp back up to full operations.”
Plagued by Troubles
The brainchild of American businessman John Shaheen, Come By Chance refined its first barrel of oil in December 1973 but was beset by problems from the get-go.The refinery was financed by loans from the province and the federal government yet struggled through problems such as wildcat strikes, equipment malfunctions, and the 1973–74 embargo imposed by Arab oil producers against the United States.
In 1974 alone, the refinery lost $58 million and never recovered. By 1976, it was shuttered while Shaheen became engaged in a series of lawsuits including some brought against him and some he initiated.
In 1980, federal Crown corporation Petro Canada Exploration Inc. purchased the refinery for $10 million and kept it shuttered before selling it to Bermuda-based Newfoundland Energy Limited (NEL) in 1986 for a dollar.
The bargain-deal however came with a caveat. It stipulated that neither NEL nor any future owner can sell any of the products refined at Come By Chance to the Canadian market, except for the province of Newfoundland and Labrador. As a result, the refinery exports some 90 percent of its products.
The refinery was sold again in 2006 to Calgary-based Harvest Energy for $1.6 billion, and in 2007 it processed some 115,000 barrels of oil per day and enjoyed export revenues of more than $2 billion, according to the provincial government.
In 2014, the refinery was sold to Silverpeak’s North Atlantic Refining Ltd. operators, but less than three years later the company was looking to sell the asset because of increasing costs.
Irving, which owns the other Maritime-based refinery in Saint John, New Brunswick, did not respond to queries from The Epoch Times.
Newfoundland and Labrador already suffered oil industry job losses this past June after Parker Drilling announced layoffs for its workers at the Hibernia platform. That compounded bad news from the end of March, when Chinese oil company CNOOC International announced that due to the pandemic it was delaying exploration drilling in the Flemish Pass Basin, about 400 km east of the province.
Parsons has indicated that other companies, including Origin International, may be interested in the refinery but nothing solid has yet emerged.
