Refinery project needs financial partner, Irving says

Irving Oil executives have confirmed they are studying the feasibility of buildinga second oil refinery in Saint John.

CBC News reported Wednesday that the company is interested in building a large oil refinery on hundreds of hectares of land it recently purchased near Red Head, east of Saint John.

The company held a news conference Thursday to talk about the project, whichis expected to create about 1,000 jobs in the city and could cost between $5 billion and $7 billion.

The company's present refinery processes 300,000 barrels of oil per day and is the largest refinery in Canada. The second refinery is expected to be equal in size.

Kevin Scott, Irving's director of refining growth for oil,spoke about the company's plans during a Saint John board of trade luncheon on energy on Thursday.

Scott says thenew refinery would constitute the single largest private sector investment in Atlantic Canada, and Irving Oil needs a financial partner to make it happen. He says the company hasn't made a final decision yet, but hopes to in early 2007.

"We've got a lot of gates to go through [and] we've got a lot of hurdles to cross. It's a challenge and an opportunity we've been asked to explore, but it's not a certainty and hopefully that's a key point people take away, that there's a lot of work left to do," Scott said.

There hasn't been a new refinery built in North America in the last 25 years, and thedemand for gasoline in the United Statesis now more than the country's refineries can handle.

'Attitude changing a bit'

Jim Pantelidis, a former executive in charge of Petro-Canada's refining operations, said Irving Oil's timing is right.

"All of a sudden now, the mood and the attitude is changing a little bit, and something that would have never been contemplated 10 years ago or even five years ago, building a new refinery, is now coming to be more viewed as potentially not a bad investment," he said.

Roger McKnight, who'swith En-Pro energy consultants, said the company, owned by Kenneth Irving, is poised to be among the highest-producing oil businesses in the world.

"He's thinking far ahead and he'll be the only new refinery on the books in North America he'll be up there with the big boys in the top three in North America."

McKnight said a new refinery would cost approximately $3 billion and would take seven years to build.

Analysts say Irving is well positioned to be the first to build a new refinery and the companyhas convenient access to the huge market on the U.S. eastern seaboard.

Friendly political environment

It already has the technology to produce low-sulphur fuels, andthe political environment in New Brunswick is friendly toward projects like a new refinery.

Liberal Premier Shawn Grahamcampaigned on apromise to turn New Brunswick into an energy hub forNorth America.

In Saint John on Wednesday, Graham was thrilled by the prospect of a second refinery being built in the city.

"Any time we see a major development by the private sector in New Brunswick, it's good news," he said.

Pantelidis said he's convinced a new refinery will be built somewhere in North America. He said the company that does it first could stand to gain the most.

"If Irving is in effect contemplating building one of a significant size, it might be actually a pretty good investment."

Meanwhile,environmental advocates in Saint John are nervous about what a second refinery would mean for a city they say is already struggling to cope with industrial air pollution.

The Conservation Council of New Brunswick said building a new oil refinery is not a sustainable way to grow the provincial economy.

Wants air concerns addressed

Executive director David Coon said the new Liberal government is sending a mixed message. He said Graham wants to make the province an environmental leader, while promoting projects that are not environmentally friendly.

"You know, an oil refinery is a health hazard, let's face it.And you can't imagine that another oil refinery would be permitted in Saint John until the existing problems with bad air, with the cancer-causing chemicals and the smog-causing pollution churned out at the existing refinery gets dealt with," he said.

Coon said the Saint John refinery is the biggest source of chemical pollution of any refinery in Canada.

He said the proposal for a second refinery should undergo a full federal environmental impact assessment with public hearings.