By BEN LEFEBVRE and RYAN DEZEMBER
The Come By Chance oil refinery in Newfoundland, which has
attracted a series of owners over the years, is once again for
Korea National Oil Corp., which inherited the 115,000-bpd
refinery when it bought Harvest Energy in 2009, has hired
Deutsche Bank to sell the facility, according to people
familiar with the matter. It is unclear how much, if anything,
the refinery could fetch should the company succeed in finding
Harvest spokeswoman Kari Sawatzky declined to talk
specifically about the refinery, which has changed hands
four times since 1986, but said the company has been evaluating
the different parts of its business since late 2012 to see what
might go up for sale.
"We're looking at all of our opportunities right now," Ms.
Harvest lately has reported deepening losses at the
facility. The company's refining operations, which are
centered on Come By Chance, lost $106.6 million in the first
half of 2013, compared to a $92 million loss during the same
period the year before.
Another factor that could give would-be buyers pause: Come
By Chance's design makes for difficult operations. Built four
decades ago, the facility is only accessible by barge, a more
expensive mode of transport than pipelines -- and one that also
isn't foolproof in eastern Canada's choppy weather. As the
refiner's own website says, "It's not the most hospitable place
for an oil refinery."
If the logistical impediments are bad, the market outlook is
possibly even bleaker. North American gasoline demand is
stagnating as more fuel-efficient cars hit the road. Analysts
consider flat fuel sales in the US as the best-case-scenario
for the next several years, with the US Energy Information
Administration predicting fuel consumption actually will fall
slightly next year.
The North Atlantic basin, Come By Chance's home, needs to
shed refining capacity in excess
of 1 million bpd to get the market back in balance,
Bill Klesse, CEO of Valero, said during a recent meeting with
The best hope may be for a potential buyer to emerge with a
plan to deliver relatively cheap US crude to the facility
instead of the more expensive oil from the Middle East and Europe that it traditionally has
processed. Others have done that. Valero, the largest
independent refiner in the US, is providing its Quebec facility
with south Texas oil via barges. Carlyle Group, which last year
took control of Sunoco's Philadelphia refinery, is attempting
to connect that facility with supplies of cheap US crude,
The higher prices of imported oil prompted Sunoco to plan
the closure of the Philadelphia refinery before Carlyle,
prodded by White House officials, decided to invest in the
The owners of a 650,000-bpd refinery in the US Virgin
Islands weren't so fortunate. After failing to find a buyer for
the money-losing refinery, co-owners Hess and
Petroleos de Venezuela (PdVSA) shut it down last year. It
is now used to store oil.
"If the company can get (Come By Chance) sold at any price,
it would be a positive," said Brian Youngberg, a senior analyst
at Edward Jones.
Dow Jones Newswires