Silverpeak rejects offer from Origin International for Come By Chance refinery purchase

·5 min read

There was another ground-shaking development in efforts to save the Come By Chance oil refinery late Thursday afternoon, with owner Silverpeak rejecting an offer to sell the idled facility to Origin International.

In a brief statement, Silverpeak said Origin's offer was "not in the best interests of our stakeholders or the long-term benefit of our employees and the people of Newfoundland and Labrador."

Silverpeak said Origin will have to come back with a better offer if future talks were to take place, and that it will continue its efforts to find a solution to the problems at the refinery.

It's the latest twist in a constantly shifting saga since North Atlantic Refining Limited stopped making fuels in March and laid off all but a handful of the hundreds of people who work at the site.

And Silverpeak's statement came just hours after the CEO with Origin, Nicholas Myerson, made his first public comments on his company's bid to take over the refinery.

Origin made what Myerson described as a competitive bid for the refinery and a chain of retail stores last week.

But during a series of media interviews Thursday morning, Myerson signalled that he was getting the cold shoulder from Silverpeak, describing what he called "radio silence" following his offer.

Myerson, speaking from his home in Long Island, New York, even called on political leaders to step in.

"We are at a point right now where we believe the government needs to decide on what strategic pathway it needs to go down. Either a pathway of uncertainty, which we're currently in, or could there be a pathway to executing a secure and clear plan on how to get these employees back to work, and to get this refinery restarted," Myerson said.

'A serious situation'

Myerson would not offer specifics on what politicians can do to help, but he said it's not good enough to say it's a matter between two private companies.

"We're talking about hundreds of jobs. We're talking about the environmental health and safety of the asset. I don't know what government can do. I'm not an expert in that regard. But this is certainly a serious situation," he said.

Origin International
Origin International

Energy Minister Andrew Parsons responded to Myerson's comments Thursday afternoon, saying the provincial government is doing all it can.

"There's been open lines of communication with Origin, Silverpeak and with anybody that's involved, but at the end of the day this is an asset that is not owned by government. It's owned privately," said Parsons.

Parsons said Origin has to remember it's not the only game in town.

"I can tell you there are other groups out there that have signed documentation. That they are in active conversation with Silverpeak," said the minister.

Silverpeak has said it's had "several preliminary conversations with organizations and investors from around the globe."

Origin International
Origin International

Origin released a statement Thursday evening response to Silverpeak's rejection, again saying its offer was competitive.

"We have appropriate financial backing. We have shared this information with the Government of Newfoundland and Labrador. We would encourage Silverpeak to tell us along with the people of Newfoundland and Labrador what are the specific issues they would like addressed."

Origin called for "transparency and openness," saying "the future of the refinery, its employees and the regional economy hangs in the balance."

Refinery in warm idle mode

The refinery is currently being maintained in what's called warm idle mode, which would make a restart quick and cost-effective.

Silverpeak has stated it can continue doing this until next spring, at which point it will close the refinery permanently if an economically viable solution is not found.

Myerson is confident in his company's strategy, despite the fact that the refining business worldwide is struggling.

"Come By Chance is a very unique asset. It sits in a halfway zone between US and European markets. It is a logistical location that optimises transportation of waste oils, waste vegetable oils, as well as normal petroleum products. The asset itself is unique in the sense that in has all the right equipment in our opinion to co-process," he said.

"We also believe it has a very skilled workforce … and we believe it would be an ideal candidate for this type of business plan in this new era of refining."

1 per cent of provincial employment

The refinery was in growth mode prior to the pandemic, with production increased to 130,000 barrels per day, plans for future expansion, and supported some 400 direct and 200 contract jobs.

According to a document prepared by the Department of Finance last month, the refinery represented one per cent of total gross domestic product in the province last year, or roughly $300 million, and just under one per cent of provincial employment.

But the pandemic has battered oil markets, and North Atlantic has said it's no longer feasible to operate the refinery.

Terry Roberts/CBC
Terry Roberts/CBC

Myerson wouldn't provide details on his company's bid price for the refinery, but denied he was trying to scoop up the assets at a bargain basement price, at a time of economic upheaval.

"This would have been an asset we would have wanted to purchase if the refining market was in a good place right now," he said.

Origin is a Maryland-based company that specializes in the recycling of waste oil, but it has big plan to transform the Come By Chance refinery into what Myerson calls a co-processing facility.

The strategy is to continue refining crude oil into various transportation and heating fuels, but also to process waste mineral oil and gas vapours, which is already an Origin specialty, and expand into the processing of waste vegetable oil.

Origin is also promising to make significant environmental upgrades, with options such as generating its own electricity from wind turbines.

"We believe that by having this business plan, and by having this co-processing capability, it is a valid business plan that is profitable, even in today's refining markets," he said.

"We really feel that this asset could be a leading example of taking a traditional petroleum refinery and creating an environmental, social and governance energy platform."

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