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Irving backs away from refinery deal

Workers to find out this week about jobs at Come By Chance

UnknownLast May (2020), Irving Oil announced they would purchase the Come By Chance oil refinery owned by the New York-based investment group Silverpeak. At that time Irving had big plans that would see the company tap into Newfoundland and Labrador offshore oil resources.

 This October, sources were telling media that Irving had backed out of the agreement to purchase the Placentia Bay, N.L. refinery. Workers received notice from plant operator North Atlantic Refining on October 5.

North Atlantic Refining Ltd. has stated that the closure of the facility is not yet a done deal. There are reports of another party interested in the facility. Origin International Inc.,a Maryland-based US company that specializes in recycling used oil, has released a statement indicating its interest.Management also plans to work to reduce costs further in a last-ditch attempt before turning off the lights and letting the 500 employees and contract workers go. The plant refines 135,000 bbl per day of crude and contributes as much as 5% of the province’s GDP.

The Come By Chance facility has a storied past. It began operation in 1973 but was bankrupt by 1976 with owner Shaheen Resources leaving creditors with $500 million in debt, a figure that was among the largest credit failures in Canadian history to that time.

In 1980, Petro-Canada picked up the site for a mere $10 million. However, rather than reactive the plant, Petro-Canada decided to sell it to Bermuda-based Newfoundland Energy Limited in 1986 for the sum of $1. The group reopened the refinery following upgrades the next year.

The deal with Petro-Canada stipulated that the plant could not supply the Canadian market (except for Nfld & Labrador) and product was largely sold into the US. Newfoundland Energy operated the plant at a profit until 2006 when it sold the facility to Calgary’s Harvest Energy Trust for $1.6 billion. North Atlantic Refinery Limited

OCTANE editor Kelly Gray can be reached at kgray@ensembleiq.com


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Paper towel in short supply as people stay home, clean more

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The head of Canada’s largest manufacturer of tissue products says he’s concerned about the industry’s supply of paper towel ahead of a potential second wave of COVID-19.

Kruger Products CEO Dino Bianco said demand for paper towel has soared as people stay at home and clean more frequently.

“Toilet paper was the highlight of the COVID stay-at-home mandates but now we’re seeing the big use of paper towels,” he said in an interview.

“COVID doesn’t make you go to the bathroom more, but it does make you clean more.”

Bianco said the industry’s paper towel inventory is “very tight” across North America, despite efforts to build up supply.

“Paper towel is the big watch out for us,” he added. “We’re trying to build our inventory but we’re very tight.”

Kruger, which makes SpongeTowels paper towels, isn’t the only tissue manufacturer seeing continued strong paper towel sales.

Geraldine Huse, president of Procter & Gamble Canada, said demand for the company’s tissue products, including Charmin toilet paper and Bounty paper towels, increased significantly in mid-March.

But while toilet paper consumption has returned to normal levels, she said paper towel sales continue to outpace pre-COVID levels.

“Consumer demand for paper towels remains high across Canada as consumers are staying at home more and their cleaning and hygiene habits have increased,” Huse said in an emailed statement.

She said the company expects strong sales of cleaning products, including its paper towel, home cleaners and dishwashing liquid, to continue in the coming months and that P&G is “producing and shipping 24/7 to meet demands.”

Tim Baade, senior vice-president and general manager of Irving Consumer Products, agreed that demand for toilet paper has started to level off while paper towel usage remains strong.

“Demand for our towel has remained high,” he said in an emailed statement. “Bath demand is still up from pre-COVID-19 levels, but lower than its peak earlier this year.”

Baade said the company, which makes Royale paper towel and other brands under store “house brands” and private labels, continues to maximize its production to help mitigate any supply gaps.

Meanwhile, Kruger is pushing to open its new plant in Sherbrooke, Que., to add more capacity in Canada, Bianco said.

Initially slated to open in February 2021, he said the company is trying to get the factory up and running faster. Some machines started over the summer, while more are set to come online next month.

Bianco said the plant will increase the company’s paper towel and toilet paper manufacturing capacity by 20 per cent.

For now, Kruger has cut back on its stock keeping units _ or SKUs _ to maximize its production of key products.

At the height of the pandemic, the company slashed the number of products it makes in half to about 90, down from 180 key products. The company is back up to about 110 items, Bianco said.

There will be plenty of the company’s Cashmere brand toilet paper, for example, but the recycled sub-brand EnviroCare will be harder to come by.

That’s in part because it’s less popular, he said, but also because of issues with the supply of the raw product _ recycled paper.

“We use recycled paper that comes from white paper used in offices,” Bianco said. “That market has dried up because people aren’t in offices printing, so it’s hard to get the recycled fibers used to produced recycled tissue.”


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Irving Oil cutting 250 jobs, 6% of workforce, due to the economy

Irving Oil is cutting its workforce by 250 people or about 6% in light of the current economic conditions.

The New Brunswick-based company says the reductions will affect operations in Canada, the United States, Ireland and Britain.

No timeline for the cuts was immediately available.

Irving Oil president Ian Whitcomb says in a statement that the challenges faced in its business and industry “are unlike any we have ever experienced.”

He says the company hoped to avoid this outcome as it worked “to keep our business secure” through the extreme challenges from the COVID-19 pandemic.

Founded in 1924, Irving Oil operates Canada’s largest refinery in Saint-John, N.B., and more than 900 fuelling stations and distribution terminals in Eastern Canada and New England.


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Western oil heads east

UnknownThe first shipment of Alberta crude from British Columbia tidewater is on its way to the Irving Oil refining facility in Saint John. The route will take the Panama-flagged tanker, Cabo de Hornos, 11,900 kilometres from Burnaby, B.C. via the Panama Canal to New Brunswick.

The petroleum, sourced through Alberta energy company Cenovus, comes just two months after Irving announced it would seek greater Western Canadian resources for its East Coast facilities following the demise of the Energy East Pipeline project. The (CAN) $12 billion Energy East Pipeline was proposed by TransCanada (TC) Pipelines in 2013 and would have travelled 4,600 kilometres to points in Quebec and New Brunswick. If completed the line would have been among the world’s longest and would have carried 1 million barrels of Alberta and Saskatchewan crude per day. Following the election of the Trudeau government, the project was scrapped in 2017, leaving Eastern Canadian-based operators, such as Irving, to continue to source both refined and raw petroleum from the U.S. and other markets.

Now, using the Panama Canal route Irving will see the 229-metre Cabo de Hornos vessel arrive July 14 at refinery receiving docks in Saint John. After the Energy East Project was shelved, Irving approached the Canadian Transportation Agency (CTA) this spring (April) to ask for permission to use foreign tankers in an effort to increase the amount of domestic crude Irving gets from offshore Newfoundland and Western Canada. Approval was granted in May and Irving got busy making arrangements.

Irving has reported that it was importing the vast majority of its refinery inputs from sites in the U.S. and was using about 20% Canadian petroleum in its operations. In its application to the CTA Irving Oil stated that they sought to lessen their reliance on foreign petroleum at their Saint John facility, which is Canada’s largest refinery with a daily processing capacity of 320,000 barrels per day.

“It is critical to our customers, to our business, and to energy security throughout Atlantic Canada that we are able to use foreign crude oil tankers to access Western Canadian crude oil on an urgent basis and going forward for one year to allow for effective and flexible supply chain planning and to strengthen the link between Canadian oil producers and our refinery in this challenging and uncertain time,” said Irving Oil chief refining and supply officer Kevin Scott.

OCTANE editor Kelly Gray can be reached at Kgray@ensembleiq.com.


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Irving buys Come By Chance refinery

Move enhances company’s market edge

UnknownIrving Oil has announced the completion of its acquisition of North Atlantic Refining Corp. from U.S.-based investment firm Silverpeak. The deal, with undisclosed financial terms, includes a 135,000-barrels-per-day (bpd) refinery located at Come By Chance, NL, as well as a network of retail sites and other marketing assets.

Unknown-1The retail locations include nearly 100 company-owned and dealer sites and cardlocks, including the Orangestore chain of 24 convenience stores. North Atlantic Refining Corp has been a well-known major player in the province’s stove oil, gasoline, and propane trade since 1950.

The Newfoundland refinery is one that comes with a storied past of bankruptcies and business losses. Bought and sold a number of times since it went into service in the early 1970s, the facility was built to refine light crude and takes about 70% of its inputs from sources in the U.S. Silverpeak had recently invested $400 million to bring capacity up from about 100,000 bpd to 135,000bpd. Proposed is a further upgrade that would increase output to more than 165,000bbd and add a new coker that would allow a heavier grade of crude to be refined.

This initiative that is now in Irving’s court would bode well for the company given that they just arranged to ‘import’ Albertan heavy bitumen via tankers through the Panama Canal route. As well, Newfoundland and Labrador offshore wells also produce heavier crude and with an upgrade, the Come By Chance facility could finally refine the locally sourced heavy oil.

The Come By Chance refinery and the North Atlantic Refining Corp. convenience retail and fuel network in Newfoundland and Labrador is a strategic fit for Irving. With the closing of the Silverpoint deal, Irving will now operate the only two refineries in the Atlantic region. The other is Canada’s largest refinery at 320,000bbd and is located at St. John, NB. These facilities are married to another refinery in Cork, Ireland (71,000bbd). Together this recent agreement gives Irving a solid footing in fuel refining in the North Atlantic basin as well as an uptick in retail locations that create a greater market presence for this Halifax-based family business.

Kgray@ensembleiq.com