Thursday, October 22, 2009

Newfoundlandia: Dollar for your thoughts

Korea National Oil is proposing a $4.1-billion takeover of Harvest Energy Trust, owners of the Come by Chance oil refinery.

That $4.1 billion is a far, far cry from the $1 the Placentia Bay refinery was sold for in 1986. You read that right — $1, or four quarters.

Come by Chance opened in 1973 to much fanfare.

In fact, the world’s much luxurious ocean liner, the Queen Elizabeth II, steamed up Placentia Bay for the grand opening with some 1,000 guests on board — guests who could not otherwise be accommodated in the outport.

Three years later the refinery went into receivership — at the time, the biggest bankruptcy in Canadian history — with cumulative debts in the order of $500 million, including $42 million owing to the province and another $40 million to the feds.

Years earlier, questions over financing of the project had driven young Smallwood cabinet ministers John Crosbie and Clyde Wells out of cabinet and the Liberal caucus.

Petro-Canada picked up Come by Chance in 1980 for the fire-sale price of $10 million, and the facility was mothballed.

John Shaheen reportedly commented that Petro-Canada had “bought itself the biggest lemon in the world.”

Then, in 1986, the refinery was sold for $1 to Bermuda-based Newfoundland Energy Processing Ltd., owned by Cumberland Farms Inc., a large Massachusetts-based convenience-store chain.

However, when Petro-Canada sold the refinery, it stipulated that neither Newfoundland Energy nor any subsequent buyer could sell any product it refined at Come By Chance to the Canadian market — with the exception of Newfoundland and Labrador.

As a result, the refinery exports up to 90 per cent of its production, primarily to the United States.

After a refit, Newfoundland Energy ran the facility until they sold it to North Atlantic Refining Ltd. (now Harvest Energy Trust) in 2006 for $1.6 billion.

I don’t know about you, but there’s a loonie burning a hole in my pocket …

No comments: