May 18, 2012:

Imperial Oil has put its second-oldest oil refinery in Canada up for sale on waning demand for product from the Dartmouth, N.S., facility in a highly competitive Atlantic basin. Imperial confirmed Thurs-day the 88,000-barrel-per-day refinery would be either sold or possibly transformed to a terminal as the integrated company, Canada's largest refiner, seeks to reduce its losses. "Demand for refined products in the basin has declined in recent years and, despite tremendous efforts by our workforce, the refinery has not met expected financial returns," Imperial said in a statement.

A decision on a sale or other alternative, including having the operation in the Dart-mouth community converted to a terminal, is expected to be made by the first quarter of 2013, Imperial executive Gilles Courtemanche told a news conference Thursday. "The demand for diesel has grown by a factor of five, but gasoline demand in Europe today is lower than it was in 1970," said Courtemanche, vice-president of refining and surplus for Imperial Oil. The 95-year-old refinery had been struggling to be profitable during the global recession as demand for its products, ranging from gasoline to home heating fuel and asphalt, slid and a surplus of supply grew.

Margins tightened further last year when feedstock prices shot up at the same time a mild winter reduced demand for heating fuel. "In the fourth quarter we saw refining margins really drop around the world, but specifically in areas that were running higher-priced Brent-based crudes," said Jeff Mower, with Platts. Brent, priced primarily off North Sea crude, has traded significantly above Western Canadian oil prices for months, reducing already thin profits for refiners in the Atlantic basin. 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 poor economics. Several refineries in the United States have shut down due to the challenging conditions, prompting quirky deals such as Delta Air Lines buying ConocoPhillips' idled plant in Trainer, Pa. for about as much as buying a new jet plane.

Courtemanche said the company had received some expressions of interest in the oil refinery, and has compiled a list of more than 24 potential buyers. Refineries in Canada's East Coast and Ontario have used Brent and West African crude as feedstock for years as it was less costly than oil shipped cross country from Western Canada. As imported crude prices shot up, refiners, petrochemical producers and pipeline operators started looking into alternatives such as Enbridge Inc.'s proposed re-reversal of a Montreal-to-Windsor, Ont. line. The possible closure of the Dartmouth facility would the be second in as many years for Canada. Shell Canada in 2010 closed its 161,000 bpd Montreal East refinery, converting it to a fuel terminal by the end of the year after failing to find a buyer.

About 200 employees and 200 contractors work at the refinery and related terminals in Dartmouth, Sydney, N.S., Corner Brook, N.L., Sept-Iles, Que., and Cap aux Meules in the Magdalen Islands. The company's decision comes two months after the provincial government ex-tended a tax break for the refinery for five years. The Dartmouth refinery is the smallest of Imperial's four crude oil processing facilities, with the 187,000-barrel-per-day Strathcona refinery near Edmonton the largest.

The company also runs a 121,000 bpd refinery in Sarnia, Ont., which was commissioned in 1897, and a 112,000 bpd re-finery in Nanticoke, Ont. Canada consumes almost all of the two million barrels per day of refined product produced in the country's 19 refineries.

By Calgary Herald