Future not so slick for other Canadian refineries

Lynn Ball, July 25, 2009, Canadian Press--A proposed $2 billion expansion to the Harvest Energy Trust (TSX:THE.UN) owned North Atlantic refinery in Come-by-Chance, N.L.. has been deferred until credit markets improve.
According to the Oil & Gas Journal, an industry publication that tracks refineries around the world, there are 18 existing refineries in Canada, 154 in North America and 655 on the planet.

Michael Ervin, president of Calgary-based petroleum consulting firm M.J. Ervin & Associates Inc., said the Irving Oil Ltd. and BP Plc (NYSE:BP) proposal isn't the first project to be abandoned and certainly won't be the last.

He believes a few of North America's smaller capacity refineries may even close as demand for crude oil products continues to decline.

Here is a list of Canadian refinery projects: some existing, some closed and some whose future is looming.

* A proposed $2 billion expansion to the Harvest Energy Trust (TSX:THE.UN) owned North Atlantic refinery in Come-by-Chance, N.L. has been deferred until credit markets improve. Currently the refinery produces 115,000 barrels-per-day but the expansion would bring the capacity up to 190,000 barrels-per-day.

* The Newfoundland and Labrador Refining Corp.'s proposed 300,000 barrels-per-day refinery in Placencia Bay, N.L. has been stalled by the credit crunch. On June 24 the company received protection from its creditors, which gives it time to propose a restructuring and find financing or a partner for the project, possibly both.

* A year ago Royal Dutch Shell Plc (LSE:RDSa) cancelled a proposed multibillion-dollar oil refinery near Sarnia, Ont. The company blamed rising costs and market conditions for the cancellations.

* Royal Dutch Shell is also considering closing its 75-year-old Montreal-East refinery, which could result in 550 layoffs. The company is also considering converting it to a terminal, making it a joint-venture operation or continuing operations. The refinery produces 130,000 barrels a day.

* Valero Energy Corp. (NYSE:VLO.N) operates a 235,000 barrel per day refinery in Quebec. The facility employs about 500 people. A February survey by the Oil & Gas Journal showed the refinery's 45,000 barrels per day expansion was under construction, though no timeline was provided.

* Petro-Canada (TSX:PCA) shut down an Oakville, Ont. refining operation in 2003 and consolidated the operations with its Montreal refinery. According to the Oil & Gas Journal's survey Petro-Canada was in the engineering phase of a Montreal-based $1 billion refining project that would produce 25,000 barrels per day, and was due for completion by December 2009.

* In the Alberta oil sands, nine companies have 18 various projects underway that would increase the crude output of the sands by more than 3.2 million barrels-per-day, according to the Oil & Gas Journal's survey. These projects aren't technically refining as they would be manufacturing crude out of the sand