Budget doubles for proposed Newfoundland refinery

A company planning to build a second refinery in southern Newfoundland says the project's budget has doubled its original estimate.

The Newfoundland and Labrador Refining Corp. wants to build a new refinery between Come By Chance site of the existing North Atlantic Refining operation and North Harbour, in Placentia Bay.

The company, which hopes to present the results of a feasibility study to investors within a month, has also doubled potential capacity, and says production could run as high as 600,000 barrels per day.

The company said rising costs of materials, such as steel and nickel, are pushing up the price for the proposed refinery.

"It's not going to be cheap. It's not going to be below $4 billion we know that much at this stage," said spokesman Roland Butler.

Details of the project are in an undertaking registered with the provincial Environment Department. Public comment will be accepted until Dec. 4 and the government is expected to pass judgment by Dec. 9.

Butler said doubling capacity raises the budget, but also the company's options.

"You'd like to give yourself that option, that opportunity, rather than box yourself in," he told CBC News.

However, Tom Adams, executive director of the watchdog organization Energy Probe, said the revised budget makes the project more marginal.

"I think this project is exceptionally ambitious and should be treated as a high-risk project," Adams said.

While the refining industry is in a boom cycle, Adams said, that will not likely last, as more than 100 proposed refineries are in the works.

"The good times are not expected to last out into the future," Adams said.

Newfoundland and Labrador Refining Corp. is backed by St. John's-based mining company Altius Resources Inc., and its proponents include Scottish-born billionaire Harry Dobson.

In October, Irving Oil of New Brunswick confirmed it is considering building a second refinery in Saint John. Newfoundland and Labrador Refining Corp. saysthat projectwill not deter its plans.