Newfoundland and Labrador Refining Corporation Plans to Invest $2 Billion for Refinery in Newfoundland

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Researched by Industrial Info Resources (Sugar Land, Texas). Newfoundland and Labrador Refining Corporation (NLRC) is planning to invest $2 billion to construct a 300,000-barrel per day refinery located at Placentia Bay in Southeast Newfoundland. The location is being considered because of the ice-free and deep-water shipping lanes. Also, the location proximity should be attractive for crude oil supplies and markets in Europe and North America. The company is partnered with Altius Minerals Corporation (TSX:ALS)(Saint Johns, Newfoundland), which has a 37.5% ownership in the new refinery. In addition, several European investors are also responsible for the development of the project. NorCan Consulting, Limited (Saint John’s, Newfoundland) is currently performing the feasibility study for the project.

In September 2006, the company completed phase II of a three-phased $7 million feasibility study that will take a total of 42 weeks to complete. The third phase is expected to be complete by the end of 2006. Upon favorable results of the study, NLRC expects to begin raising money to finance the project. In 2007, the company expects to select an engineering and construction firm to begin the design and construction. The planned refinery will supply gasoline markets in the northeastern United States, processing medium to heavy sour crude oil from the North Sea, Middle East, and Offshore Newfoundland regions. The construction of the refinery is expected to begin in early 2008 and take about 48 months before startup.

When operational, the refinery will be the second refinery in Newfoundland. The first was originally constructed in the early 1970s by Shaheen Resources then was later purchased by Newfoundland Processing, Limited. In August 1994, North Atlantic Refining, Limited (NARL) purchased the refinery from Newfoundland Processing, Limited and currently processes sour crude and employs 700 people. In August 2006, Harvest Energy Trust (NYSE:HTE ) (Calgary, Alberta) entered into an agreement to purchase the NARL refinery. The agreement is expected to finalize in October 2006. Harvest in one of Canada’s largest conventional oil and natural gas producing companies with five core operating areas across Western Canada.

Industrial Info is currently tracking two other grassroot refineries proposed in the United States. Arizona Clean Fuels is currently planning to invest $2.5 billion to construct a 150,000 barrels per day refinery in Yuma, Arizona. In addition, MHA Nation Clean Fuels will invest $200 million to construct a 15,000 barrels per day refinery in Makoti, North Dakota. The last refinery constructed in the United States was Marathon Petroleum Corporation located in Garyville, Louisiana in 1976.

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