New owners guarded on refinery expansion plans

People who depend on a Newfoundland oil refinery are hoping its new owners will not stop a planned expansion, which could bring hundreds of new jobs to the enterprise.

North Atlantic Refining had developed plans for a massive expansion before its parent company, Swiss-based Vitol, put the Come By Chancerefinery on the block last December.

Harvest Energy Trust, the upstart Calgary company that announced its purchase of North Atlantic Refining on Wednesday, is not committing to the plan, which Vitol said last year could cost as much as $800 million to complete.

Harvest Energy Trust is spending $1.6 billion to buy the refinery and related assets, which include a chain of regional gas stations.

Herb Brett, president of the area chamber of commerce, said the expansion would mean more jobs and cash flow in the Placentia Bay region.

"A 300,000-barrel-a-day facility is better, more efficient, and more profitable," Brett said.

North Atlantic's output is about 115,000 barrels of oil per day, with annual exports topping $2 billion.

The purchase makes the refinery Harvest Energy Trust's largest asset.

Harvest Energy Trust president John Zahary said he found the expansion plans intriguing.

"It's an opportunity for us to do even more," he said.

"[We can] take some of the fuel oil, which is a lower quality product that we produce, and turn it into higher quality products so that we can even be more profitable, more successful in the years ahead."

The expansion could prove to be financially taxing, however, for four-year-old Harvest Energy Trust.

After the North Atlantic deal was announced, the Standard & Poor's rating agency put Harvest Energy Trust on its CreditWatch list.

In the meantime, the company said the 700 jobs at North Atlantic are safe, and the company will continue under the same trade name.

Come By Chance Mayor Joan Cleary admits she was nervous when she found out last December the refinery was put up for sale. She was relieved to hear there would be no job losses.

"With any sale, there's always a little bit [of what] I guess you would call normal anxiety, so I think that was put to rest when the refinery was sold," Cleary said.