Husky and Come by Chance Updates #nlpoli

There is no good reason for governments to intervene in the oil sector even as much as they have.  It has nothing to do with the gibberish of "decarbonization" or whatever the greenies will yell down next to the peasants from the ivory tower.

It's just bad business. 

And bad business is the same as bad policy.

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When Husky shut down the West White Rose expansion, that should have been a clue the company was in serious financial difficulty.

SRBP pointed it out plainly.  Husky's financial statements confirm  it.  Announcement of the sale of Husky to Cenovus came as no surprise. 

It was also no surprise that the current owners of North Atlantic Refining are exploring the idea of turning the refinery into a tank farm.  Rumour around town was that Irving was more interest in the storage potential than in using the refinery for anything more than a tank farm.

Neither of these stories will lessen demands from the local oil patch, from companies, and from the politicians for the federal and provincial governments to prop up this company or that project.

Come by Chance and the Politics of Inertia #nlpoli

Is *this* the real El Dorado?

More than six months after they shut it down, the company that owns the Come by Chance oil refinery wants to sell it.

 And they want provincial taxpayers to pay.

According to Saltwire, “Glen Nolan, president of the United Steel Workers Local 9316 union, said that in recent conference calls officials of the province’s energy department indicated Silverpeak had floated” the idea that the provincial government would pay to keep the plant in hot idle mode.  

Between 150 and 175 workers have been laid off from the facility since February.  Another 60 or so are working to keep the plant ready to run.   

A deal with Irving – reported by Canadian Press and others as a done deal in late May – came apart for reasons that aren’t clear.

So while they are trying to sell the refinery Silverpeak wants the provincial government to pay to keep the refinery idled in a state where it could get back into production very quickly.  The alternative will be to mothball the refinery and lay off the remaining workers at the refinery.

The only company interested in buying the refinery – Origin International – doesn’t want to run it as a refinery.  But that hasn’t stopped the provincial government from talking it up and for representatives of the union at Come by Chance from being excited at the prospect.

It’s hard to imagine the provincial government won’t put up the cash.

Debt, Demand, and Delusions #nlpoli

The Conservatives running the province got together with their staff and key supporters this weekend to reaffirm their conviction that they alone ought to be running the province.

Some people seem to think it’s remarkable that they stand together behind Kathy Dunderdale and her supposed wonderful charm, despite what the polls says.

There’s nothing remarkable in it at all.  People in power have a hard time understanding it when the voters turn on them. They carry on with their schemes, convinced in their own rightness.  It’s a form of self-delusion.  It’s what the mind does to help people cope when what they believe and what is true are two radically different things.

Harvest Energy sold

Harvest Energy Trust announced today that the trust has been sold to Korea National Oil Company (KNOC).

Included in the sale is the oil refinery located at Come by Chance, Newfoundland.

Until this sale, KNOC operated only one other project in Canada, the BlackGold oilsands operation acquired in 2006.

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Crude futures settle below US$78

Bloomberg.com is reporting that West Texas Intermediate for November delivery finished trading at the New York Mercantile Exchange at US$77.70 a barrel, the lowest price for front-month crude futures since last year.

Brent crude - closest in price to Grand Banks light, sweet - closed the day at US$74.09, a drop of almost eight and a half dollars from the day before. That puts crude oil $13 below the average price assumed by the provincial government at budget time last April.

At close of trading on Friday, crude futures up to April were below US$80 a barrel.

In other energy news, Harvest Energy - owners of the Come by Chance refinery - have delayed a planned $2.0 billion expansion of the 115K barrel per day refinery until 2010. Current economic turmoil is also forcing other energy companies to rethink plans in western Canada.

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Come by Chance expansion in works

It is far easier to expand an existing refinery than to try a greenfield project.

That's something Bond Papers has contended since NLRC first floated its plan for a 300,000 barrel per day project that is now in bankruptcy protection, without having turned sod one.

Meanwhile, Harvest Energy is looking at a $2.0 billion expansion of its existing Come By Chance refinery that would take production from 115K bpd to 190K bpd.

Harvest Energy is now looking for a partner in the project. 

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Defence report notes threat to oil refineries

According to CanWest's David Pugliese, an internal defence department report notes that oil refineries across Canada could become a target for terrorists aimed at crippling the North American economy.

A military exercise planned for the NorthWest Territories in April will apparently include a scenario involving threats against an oil refinery. Troops involved in the exercise will come from Western Canada and the Maritimes.

Offshore rig security is not a new issue. In February, a message posted to an al-Queda website called for attacks on energy infrastructure in North America, Venezuela and Saudi Arabia.

Canada's special operations unit, JTF 2, has trained for security incidents involving offshore oil rigs. [Photo: Department of National Defence]

Pugliese notes that some of the possible threats globally include attacks on choke points where tankers pass on the way to and from oil storage and refining facilities.

In Newfoundland and Labrador, such a choke point exists in Placentia Bay. Tankers laden with crude from the local offshore and from the Middle East regularly transit the Bay on the way to and from both the Come by Chance refinery and the Whiffen Head oil transshipment facility.

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