Uncertainty remains as North Atlantic Refining continues search for new owner or investor
Union heads ensured Liberal Leader Andrew Furey and his team received a friendly reception in Arnold’s Cove Wednesday, following a taxpayer-funded lifeline last week for the idled Come By Chance refinery.
“He’ll get a warm welcome,” Glenn Nolan, president of Local 9316 of the United Steelworkers, said just before the Liberal bus pulled up to the union office late Wednesday afternoon.
“Due to the fact that we just received money from the government, we’re pretty optimistic about it,” he added.
The drab union boardroom was quickly filled with a crimson glow just after 4 p.m., as Furey and a squad of red-jacketed Liberals piled into the room — remaining mindful of the pandemic protocols for physical distancing.
There were offers of hot coffee and cold pizza, then bantering about favourite hockey teams.
Despite the cloud of economic uncertainty that has been darkening Placentia Bay for months, no one was expecting any tension.
Nolan is confident that the nearly $17 million in public money announced on Friday — the same day Andrew Furey pulled the chain on a provincial general election — saved the refinery from total shutdown, and avoided a devastating blow to the provincial economy.
“It would be very damaging,” said Nolan.
North Atlantic Refining Limited has not refined any fuels at Come By Chance since last April, when the owners, New York-based investment management firm Silverpeak, decided it was no longer viable to operate amid a pandemic and collapsing oil markets.
The refinery has been in idle mode ever since, with at least two potential sales collapsing, dashing hopes that a new owner would swoop in with big plans to restart the 130,000-barrel-per-day complex.
Silverpeak had lobbied the government for months for financial help to keep the lights on at Come By Chance, rather than trying to market a mothballed refinery to potential buyers or investors, or expose sensitive processing equipment to a Newfoundland winter.
Finally, amid a flurry of highly charged political announcements late last week, the Liberals declared it had reached a deal to keep the refinery in what’s called warm idle mode.
It came in the form of a $16.6-million grant to North Atlantic, on the condition that the company increase the workforce to 200 people — a third of the normal complement — and keep up with critical maintenance.
Prior to Wednesday’s meeting with Nolan, Furey defended the cash payment at a time when the province is facing a financial crisis that existed long prior to the arrival of the pandemic last winter.
“We thought the best way to support the women and men who work in this industry right now is to keep this in a warm idle position, so it’s perfectly positioned as oil rebounds to either restart or be sold for a high value,” Furey explained.
Furey skirted the questions when repeatedly asked whether Silverpeak had threatened to turn out the lights unless the government opened its wallet.
“We’ve been working with companies endlessly, and we arrived at a deal before the election,” he said.
Not everyone back to work: union
The union says there are 153 people — a mixture of union and non-union positions — working at the site.
Another 56 people will start receiving calls as early as Thursday, telling them to report for work as soon as next week.
Nolan said his phone has been ringing steadily, with sidelined refinery workers — many struggling to pay the bills and worried about the loss of health benefits — asking whether they’ll gain from the injection of government cash.
“Two hundred jobs is a great thing. Unfortunately, not everybody is going to get back,” said Nolan.
The government cash is expected to last until the end of June, and Furey hopes for a positive outcome by then.
“We got six months now, and the pressure is on the company and other companies to come together to make a commercial deal that is … the best value of the people of the province,” he said.
Meanwhile, an analyst who keeps a close watch on the North American refining industry has serious concerns about the future of Come By Chance.
Marc Amons of Wood Mackenzie, a natural resources research and consulting firm, said the pandemic has pinched refiners around the world.
Speaking from his Houston Wednesday, Amons said demand for fuels such as gasoline, jet fuel and diesel is still well below pre-pandemic levels, and refiners are adapting by decreasing throughput and coping with shrinking profits.
Silverpeak is not the only refinery owner marketing their assets to prospective buyers, he said.
“There’s other refining companies looking to sell or reposition their assets. So it’s likely that any buyer looking to enter the space would have a choice of assets to purchase,” he said.
Amons said the Liberals’ decision to throw cash at the refinery might not be such a bad idea.
He said there’s a strong chance the markets will rebound later in the year as COVID-19 vaccinations increase and demand for fuels rebounds.
“[But] as we stand here today, there is still a fair amount of reason for pessimism for the outlook.”
Source: CBC | This text was excerpted from the media outlet cited on January 21, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.