Come By Chance refinery considering 'economic shutdown' less than one year after reboot
Braya Renewable Fuels is blaming tight margins and the expiration of tax credits for Come By Chance struggles
The company operating the refinery at Come By Chance confirmed Monday that it is considering a shutdown of the Placentia Bay facility, less than one year after it began producing renewable fuels.
Supervisors at the refinery were notified on Sunday that Braya Renewable Fuels "is evaluating the possibility of an economic shutdown of the plant."
In a statement, the company blamed the potential shutdown on "lower-than-normal margins and short-term market disruptions caused by the expiration of the Blenders Tax Credit."
In a follow-up statement to CBC News, the company said the shutdown may occur "later this year."
"If temporary market conditions make it economically unfeasible to operate the plant, the processing of feedstock may be paused. During this time, all equipment would be maintained in good condition and in a ready to start mode," the statement reads.
Braya currently has a permanent workforce of 230 people, and the company "plans to retain its permanent workforce if a temporary economic shutdown is required."
Some temporary employees will be laid off on Dec. 19, but the company said this workforce reduction is unrelated to market conditions, and was planned for several months.
The refinery began producing fuel 10 months ago, converting a feedstock of animal fats and vegetable oils into a ready-to-use diesel fuel that can be used in everything from a pickup truck or a train, or power a factory. Braya boasted that its product reduces overall carbon emissions by more than 50 per cent when compared with petroleum-based diesel.
At the time, Braya CEO Todd O'Malley said "the future is bright for us," and that low-carbon fuel tax credits in the United States were helping make the business profitable.
"We wouldn't have gone down the the path of investing this money … if we didn't believe that the economics of the plant were viable and sustainable for the long term," he told CBC News in February.
The first shipment of 300,000 barrels of renewable diesel was transported by ship to international markets last spring, with the company saying it was slowly increasing production to 18,000 barrels per day.
But the U.S. $1 per gallon clean fuel production tax credit, which is part of the U.S. Inflation Reduction Act, and is set to expire on Dec. 31.
Fuel marketers in the United States have been urging Congress to extend the tax credit in order to support biodiesel producers, fuel retailers, trucking companies and the soy industry.
Braya is owned by a Dallas-based private equity firm called Cresta Fund Management. The firm acquired the idled refinery three years ago and has invested hundreds of millions of dollars to convert some processing units at the facility to allow this new type of refining, with a workforce of up to 800 people on site for many months during the refit.
The refinery closed in March 2020 as the COVID-19 pandemic was ravaging the global economy. At the time, the refinery was producing 130,000 barrels of oil every day.
The provincial government invested nearly $17 million to protect the refinery's infrastructure during the search for a new owner.
The federal government also contributed $86 million from innovation and clean fuels funds.
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