* Plans include conversion to terminal
* Expects to make decision by Q1 2013
* Says has list of more than 24 potential buyers
By Nallur Sethuraman and Jeffrey Jones
May 17 Imperial Oil Ltd put its
money-losing Nova Scotia oil refinery on the auction block on
Thursday, adding to a list of plants on both sides of the
Atlantic that face sale or closure due to pricy crude and
falling gasoline demand.
The move comes a day after Enbridge Inc detailed a
C$2.6 billion ($2.6 billion) plan to pipe cheaper Canadian and
North Dakota oil east of Ontario by 2014. An Imperial executive
said that is too little and too late to consider holding out
with the Dartmouth, Nova Scotia, refinery.
Imperial, the Canadian affiliate of Exxon Mobil Corp
, said it will consider both a sale of the 88,000
barrel-per-day plant on the Maritime province's southern coast
and conversion into a storage terminal. It aims to make a
decision by the first quarter of 2013, depending on response to
marketing efforts, Chief Executive Bruce March said.
The company has received a few expressions of interest and
plans to market the Dartmouth plant to a list it has compiled of
more than 24 potential buyers in the coming months.
It is difficult to put a value on the equipment, largely
because of the depressed market conditions for Atlantic Basin
refining, Gilles Courtemanche, Imperial's vice president of
refining and supply, told reporters at a news conference.
"You have to be realistic. There's still 10 refineries out
there for sale as we speak. You have a history of 2009 to today,
where of the ones that have reached a marketplace, one out of
two sold and the other one shut down," he said.
Courtemanche said the refinery, like many on the Atlantic
coast, has been losing money in recent years as gasoline demand
dropped and as the imported oil it processes became much more
expensive than North American crude, much of which is in
oversupply in regions such as the U.S. Midwest and Midcontinent.
The plant processes oil from offshore Newfoundland, the
North Sea, West Africa and South America.
More than 2.1 million bpd of refining capacity in the
Atlantic Basin has been shut or threatened with closure over the
past three years due to razor-thin margins. In Canada, Royal
Dutch Shell shut its Montreal refinery and Irving Oil
scrapped plans for a massive expansion of its Saint John, New
On Wednesday, Enbridge signaled help was on the way when it
detailed a series of moves to get Alberta and North Dakota oil
to Eastern Canada, including reversing the flow direction of the
240,000 barrel-a-day Line 9 pipeline between Sarnia, Ontario,
and Montreal. The move will allow refineries in the region to
cut feedstock costs.
It would not, by itself, provide sufficient quantities of
oil soon enough to make a large impact on Dartmouth in the short
term, Courtemanche said.
The company has, however, recently gained optimism that it
can find a buyer as new players have entered the market, he
Last month, Delta Air Lines Inc became the first
U.S. airline to buy a refinery in order to control the cost of
jet fuel, while private equity firm Carlyle Group was in
talks with Sunoco to buy the largest refinery on the
U.S. East Coast as an outlet for the surging supply of Bakken
"Now, what's becoming more interesting as time goes by is
the fact various people have different business structures,
different business drives. Like, who would have thought that an
airline company would be interested in buying a refinery more
than a month or two ago?" Courtemanche said.
The Dartmouth refinery began production in 1918. It has
about 200 employees and 200 contractors at the refinery and
related terminals. A sale or shutdown will leave Imperial with
plants in Edmonton, Alberta, and Sarnia and Nanticoke, Ontario.
Shares of the company were down 67 Canadian cents at C$41.33
on Thursday on the Toronto Stock Exchange. They earlier touched
a low of C$41.29. Exxon Mobil owns 69.9 percent of Imperial.