How a 'basket case' oil refinery in Newfoundland came out on top
Outgoing CEO says refinery poised for bright future, with plans for growth
After many dark years, an oil refinery in Newfoundland and Labrador is not only "swimming on top" but bucking a trend that has hurt some competitors, said the outgoing CEO of North Atlantic Refining Limited.
While some refineries on the east coast of North America have struggled, the situation is increasingly upbeat at North Atlantic Refining.
"What I leave behind is a company that is set really toward a very prosperous and successful future because we have stabilized the operation," Thomas Jenke said during an interview at the Come By Chance refinery in Placentia Bay.
The upbeat tone represents a dramatic reversal of fortunes for a facility with a checkered past — five different owners, an extended closure and a political scandal at the outset — since it opened in the 1970s.
We are coming from what we call a basket case refinery to become a refinery of the future.'- Thomas Jenke
"We are coming from what we call a basket case refinery to become a refinery of the future," Jenke explained.
"And we will be growing the throughput even further and by the end of [2021], we will be the fourth-largest refinery in Canada."
Come By Chance is one of two oil refineries in Atlantic Canada, and 14 across the country.
Almost all oil is imported
Even though four fields off Newfoundland's east coast are now producing oil, Come By Chance imports most of its oil from the United States, with smaller amounts coming from Russia, Africa and Europe.
This year, just over 10 per cent of its oil has come from the Hibernia field off Newfoundland.
Not long ago, the refinery was losing money, slashing jobs, hobbled by labour friction and safety concerns, and teetering on the brink of closure.
The facility was struggling to refine 100,000 barrels of oil per day, with a costly refinery-wide outage at least once every quarter, and was dogged by corporate disputes that threatened to cripple the operation.
But a change in ownership — with a group called Silverpeak taking operational control three years ago, and Jenke's arrival on the scene a year later — has been highlighted as the catalysts behind the turnaround.
The refinery's current reliability record is unprecedented, said Jenke, who will return to his native Germany later this month.
"We have the longest uninterrupted run at the moment, so that we are without any stopping of any unit at the refinery for more than 18 months. That's never happened in the history of the company," said Jenke.
"We're on a high peak here right now. This is as good as it's ever been," said Paul Burton, operations superintendent at North Atlantic, who has worked at the refinery for 25 years.
Hibernia crude 'smell of success'
The are roughly 400 unionized and management employees at the refinery, along with more than 100 contractors.
The company and its union, United Steelworkers Local 9316, are currently in contract talks, and both sides are quietly optimistic about a positive outcome.
"Respect is the basis of everything we do," said Jenke. "We've reinstilled a lot of trust through respect."
The facility represents between five to eight per cent of the province's gross domestic product, or the value of all the goods and services produced in Newfoundland and Labrador.
And the employees appear to be riding a wave of optimism.
"It's a very good place to work right now," added Julie Peddle, who works in the refinery's health, safety and environmental department.
The refinery received a shipment of 750,000 barrels of oil from the Hibernia field late last month. Holding a jar of that crude, Peddle said, "We're very proud here at the refinery to be bringing in crude oil from our offshore Newfoundland and Labrador. And we like to be proud to say that this crude right here is the smell of success."
Relations with neighbouring communities have also improved, said Peddle.
"There's no issues on the table right now and we're very proud of the relationship we got with our communities.… Everybody has got the same common goal: to refine and to be safe."
Big investments, with more to come
The company has invested more than $250 million to improve performance, with daily refining capacity now surpassing 130,000 barrels of oil.
We are without any stopping of any unit at the refinery for more than 18 months. That's never happened in the history of the company.- Thomas Jenke
There are plans to grow that daily capacity to more than 165,000 barrels, with a focus on refining more light, sweet crude in order to comply with new laws that restrict ships from burning fuel with a sulphur content exceeding 0.5 per cent.
"We see refinery closures and refineries in trouble around us, and we have turned the tide towards a situation where we're becoming really swimming really on top of everything," said Jenke.
The employees are feeling the optimism.
"Since Silverpeak took ownership, things have continuously improved here at the plant," said Peddle. "Our safety record and our environmental footprint and our overall operation is just continuously getting better by the day and we have a very bright future here."
"We've had some low valleys, but this is really good," added Burton. "Everyone seems to be happy here right now, and we're making a lot of progress."
There are also plans to build an $8-million connector pipeline to the nearby transshipment terminal at Whiffen Head, where all the oil produced in the Newfoundland offshore is landed.
In the longer term, the company is considering a major expansion to include what's called a delayed coker complex, which would require an investment of $500 million, create up to 80 new jobs, and allow the refinery to produce high-value products such as gasoline and diesel from heavy, acidic crude like the oil produced at Hebron.
The coke produced by this process is also valuable to the aluminum industry, said Jenke.
But there are no guarantees the coker project will proceed.
"It would have to be a viable point," said Jenke. Otherwise we would be jeopardizing the future of the refinery again. And I think this refinery has had too many dark chapters."
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