Wednesday, June 19, 2013

The curtain is coming down

1. The bulker Four Turnadot lies at anchor in Halifax, March 29, with the Imperial Oil refinery, Irving Oil and Ultramar tank storage facilities in the background.

Imperial Oil finally gave up the game today acknowledging that they could find no buyers that wanted to continue operating the Imperoyal refinery in Dartmouth. While this came as no surprise, Imperial has been peddling the plant for more than a year, it will nevertheless mean a big change in the port of Halifax when they brew up their last batch of crude late this year. 
The refinery will become a tank storage facility and distribution terminal, and the refinery component will be dismantled over a long period of five to ten years. Dismantling (and perhaps cleaning up the site) will be a massive job, but it will not employ the 200 current employees and 200 contractors working there now. Imperial predicts that it will take eighty persons to run the terminal.
Many questions remain unanswered after today's PR exercise.
First in terms of the Port of Halifax is Imperial's bunkering capability to supply various grades of diesel and heavy ship fuels. Not only passing ships and regular callers need the fuel, but it is also used to support the offshore gas facilities near Sable Island.Furthermore the Port of Saint John does not have facilities for bunkering large tankers offshore, so they also come to Halifax - for now. Ships from other regional ports such as Sept-Iles, Port Cartier and Baie-Comeau also call in Halifax for bunkers. Whether Imperial values this line of business enough to maintain quantities of marine fuels in its inventory remains to be seen. If bunkering activity in Halifax is reduced it will be a sad day for ship watchers at the very least.
As a terminal it may only receive furnace oil, gasoline and diesel for local use and perhaps some re-distribution to the region. This also will reduce the number of chemical tankers and eliminate the large crude carriers that we are accustomed to seeing. Port dues and income will drop accordingly.
It will also mean that we will continue to pay world scale prices for our fuel, since there will be no Canadian crude coming in. Why would refiners elsewhere sell us their product when they can sell it on the world market?
Imperial may have made some hard decisions, but they haven't answered the hard questions.


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