May 17, 2012:

Nova Scotians must be wondering what’s happening to the provincial economy. Lately, it seems there has been a steady stream of bad news coming from some of the larger and long-lived industries in the province. The Bowater Mersey and NewPage Port Hawkesbury paper plants both threatened closure until the provincial government stepped in to find a way to save both operations with concessions.

Now Imperial Oil says it wants to sell its 95-year-old refinery in Dartmouth, which currently employs 200 staff and another 200 contractors. If a buyer isn’t found, it will likely convert the operation to a storage facility for petroleum products employing just 20 to 25 workers. The plant receives crude shipments every 10 days, estimated to be worth about $100 million. Cumulatively over the year, that makes the Dartmouth refinery a multibillion-dollar operation, the loss of which would have a significant impact on the Halifax economy and the province as a whole. It makes me wonder what the Dexter government may try to do to save the refinery.

The government spent millions of dollars to “hot idle” the NewPage mill, but it is more than likely a similar move is not an option in the case of the 88,000-barrel-a-day refinery. Hot idle was the term used to describe an effort to keep the paper mill in ready-to-go condition until a new owner could be found. It was financed at the expense of taxpayers to the tune of several million dollars. Imperial Oil says the Dartmouth refinery, which is small in terms of refineries but huge in terms of its importance to the Maritimes, has reportedly been losing tens of millions of dollars over the past number of years.

This is not the first time the plant has been threatened with closure. In the 1980s, management marked the Dartmouth operation for shutdown unless it could be made more efficient. Fortunately, a way was found to salvage the situation and the refinery remained open. How much longer the refinery will remain a going concern is to be determined. The owner says it hopes to find a buyer by the first quarter of next year, but it will convert it to a storage facility if it has to.

Imperial has also put its terminals in Sydney, Corner Brook, N.L., Sept-Iles, Que., and Cap-aux-Meules in the Magdalen Islands up for sale. In the case of the latest announcement by Imperial Oil, the petroleum giant is being conciliatory to the workers, praising them for their collective effort to keep the plant operating as best they could. And that leads many of us to believe that this time the oil company is serious about ridding itself of the money-losing plant. Nova Scotia’s only hope is that another company can be found that will be able to find a way to make the refinery profitable again.

Gilles Courtemanche, Imperial’s vice-president and general manager of refining and supply, told reporters Thursday more than two dozen companies have expressed interest in acquiring the Dartmouth plant. He says Esso will now start contacting those companies to discover if they’re truly serious about owning a refinery in Nova Scotia. Most of the production from the Dartmouth refinery is consumed domestically at the Halifax airport, the Royal Canadian Navy and numerous gas retailers around the Maritimes. The regulated retail gasoline markets in the Maritimes, however, may be a major concern for any potential purchaser.

While Imperial Oil officials downplay what the loss of the facility would mean to the price of gasoline, there is little doubt the closure of the Dartmouth refinery would likely mean higher pump prices in the coming years.

By Heald.ca