Province in Talks to Extend Come By Chance Refinery's Financial Lifeline

June 29, 2021

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(CBC/Yahoo! News) In another sign that that a restart is increasingly likely, the provincial government has confirmed that talks are ongoing to extend a financial lifeline for the idled Come By Chance refinery as negotiations for a possible sale and conversion to a biofuel plant continue.

A spokesperson for the Department of Industry, Energy and Technology said in a statement to CBC News on Friday that discussions with North Atlantic Refining Limited Partnership (NARL) for "additional financial support" are taking place.

"There is no agreement at this time; however, discussions are ongoing," Tansy Mundon wrote in an email.

Mundon said the refinery owners have requested more public money "to aid with their current purchase/sale discussions for the refinery."

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"It is the province's understanding that NARL will continue with its current level of employment while these discussions continue," Mundon wrote.

Industry, Energy and Technology Minister Andrew Parsons was not available for an interview Friday.

But for the union representing workers at the refinery, it's a positive development.

"A deal is close to getting done," said Glenn Nolan, president of United Steelworkers Local 9316.

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NARL is owned by New York-based investment management firm Silverpeak, which has been in negotiations with a Texas-based private equity firm called Cresta Fund Management for a possible sale of the 130,000-barrel-per-day refinery in Placentia Bay.

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If a sale is approved, Nolan said Cresta has plans to convert the refinery into renewable fuel production, making what's being called renewable, or low sulphur, diesel out of used cooking oil and other waste products.

Such a plan would likely mean the end of locally refined gasoline, propane and other transportation and heating fuels, and likely fewer jobs.

But it's better than the alternative, said Nolan, which is permanent closure.

"Biofuel is the future, and the world is changing," said Nolan. READ MORE

Come By Chance refinery sold, will become biofuel operation by mid-2022 (CBC)

What makes the biofuel set to come out of Come By Chance sustainable? An expert weighs in (CBC)

What we know, and don't know, about the environmental deal at Come By Chance (CBC)

Canada's Come-by-Chance refinery to be renamed Braya Renewable Fuels (Reuters)

Canada – Come-by-Chance Refinery to be Renamed Braya Renewable Fuels (Biofuels Central)

Oil refinery in Atlantic Canada to produce renewable diesel, SAF by mid-2022 (Government of Newfoundland and Labrador/Biobased Diesel Daily)

Newfoundland facility to become renewable fuels centre (Biofuels International)

COME BY CHANCE REFINERY (NOW BRAYA RENEWABLE FUELS) INTRODUCES NEW EXECUTIVE TEAM ( Braya Renewable Fuels/Associated Press)

Excerpt from CBC: But first, according to the province, here are the highlights of the just-announced agreement:

The new deal amends a previous indemnity from 2014, the last time the refinery was sold. It is for 10 years, expiring in November 2031, and covers the same lands as the last agreement.
The indemnity encompasses historical contamination prior to Cresta Fund Management's acquisition into the refinery to October 2021.
There are two separate time frames incorporated into a new overall cap of $180 million that Newfoundland and Labrador taxpayers could potentially be on the hook for: historic contamination up to November 2014 is capped at $150 million, while the period from December 2014 to October 2021 is capped at $30 million.
Officials said the province's exposure could reduce over time based on the profitability of the refinery and logistics sides of the operation.
New environmental site assessments for both the pre- and post-2014 periods are due within 18 months.

In return, here are the commitments the province says it got from the deal:

Employment levels at no less than the equivalent of 200 full-time employees.
Fuel supply to the island portion of Newfoundland and Labrador.
Maintaining of the operations of the refinery.

"This is a positive step, as the province itself looks to transition into a greener economy," Premier Andrew Furey said at the announcement.

"It's wonderful news for the province and ensures a bright future for the refinery and its workers."

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The last time the province signed an environmental agreement with the refinery owners seven years ago, the entire 30-page document and 120 pages of schedules and supporting information — including the company's business proposal and spending plans — were posted on the government's website.

CBC News asked the province if that would happen this time as well but didn't receive a response by Friday afternoon.

The government also did not answer questions about how its environmental indemnity exposure can reduce over time, based on the profitability of the operation — including details of what mechanism or formula is in place, and how that will be tracked.

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More than seven years ago, government officials identified the tank farm as the greatest environmental concern associated with refinery operations at Come By Chance.

They pointed to previous non-compliance with inspection requirements by former owners, going back decades.

CBC INVESTIGATES | Secrets and liabilities

When CBC News attempted to find out more about what has happened in the seven years since, Silverpeak declined interview requests, and would say only that they were fully compliant with all environmental rules and regulations.

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Amin (Kaushik Amin is a partner with Silverpeak): "I don't have the exact numbers in front of me. But when we acquired the refinery back in 2014, like 80 per cent of the tanks had not been inspected in their inspection intervals. So we put together a long-term plan. There's only so much bandwidth you have to inspect and remediate any individual tank, right? So we put together a plan.… It's an ongoing process. Every year you re-certify and you work on a certain number of tanks. We work very closely with the Department of Environment. We are fully compliant with all the rules and regulations around tank certification. But it's a continuing process. It's not something that you can just turn the switch in one fine day and just remediate every tank. So we have, like I said, remediated over 25 tanks under our ownership, and every year we keep adding to that list."

Jim Stump, president of Braya Renewable Fuels: "I would jump in as well and say that all of the tanks that we're repurposing for the project, and it's quite a few, every single one of them will — if it's not current with its inspection — it will be before we start back up." READ MORE