Husky to review needs for Ohio refinery, CEO says
By Scott Haggett
CALGARY, Alberta, June 27 (Reuters) - Husky Energy Inc. (HSE.TO) will take half a year to determine how much retrofitting is needed at the Lima, Ohio, refinery it's buying from Valero Energy Corp. (VLO.N) for $1.9 billion, the company's chief executive said on Wednesday.
Speaking to Reuters after shareholders approved a share split, John Lau said Husky will start an extensive review of the 165,000 barrel-a-day refinery's operations when the deal closes next week.
"We will look at...all alternatives," Lau said. "Crude purchases, sales, expansions... Hopefully within six months we should have a more definite idea. We won't change something we don't know."
Husky, Canada's No. 3 oil producer and refiner, will not have an estimate on the costs of new equipment or any potential expansion of the site until it finishes its review.
The Midwestern refinery is Husky's first major U.S. purchase. The company, controlled by Hong Kong billionaire Li Ka-shing, acquired the facility to secure processing capacity for its expanding oil sands operations, including its planned 200,000 barrel-a-day Sunrise project in northern Alberta.
Acquiring the plant frees Husky from building a new upgrading refinery to convert the tar-like bitumen from the oil sands into synthetic crude. Other firms building upgraders have faced multibillion dollar budget overruns as they compete for skilled workers and the cost of steel and other materials surges.
However Lau said the Lima refinery may not handle only the heavy, sulfur-rich oil extracted from Alberta's oil sands regions and could continue to handle other types of oils.
"We are looking at heavier crude," Lau said. "It may or may not purely be oil sands because we can use heavy or alternative crudes at this plant."
Along with its suite of potential oil sands projects, Husky is also one of Canada's biggest producers of heavy oil from conventional reserves in Alberta and Saskatchewan.
U.S. antitrust officials approved Husky's purchase last week.
Husky shares were up 75 Canadian cents at C$86.30 midafternoon on the Toronto Stock Exchange. The stock has risen 25 percent over the past 12 months.
($1=$1.07 Canadian)
