Vancouver's only refinery goes up for sale
Reuters is reporting that Chevron has put their Burnaby Refinery up for sale. The refinery is located in BC's Lower Mainland and is the only refinery operating in the Vancouver area.
Vancouver was once a major refining hub on the West Coast, with Shell, Imperial, Chevron and Petro-Canada each having a presence in the Lower Mainland. However, construction of the Trans Mountain line in 1953 changed the dynamics considerably, since the pipeline carries both refined products and crude oil from Edmonton. Three refineries in the Vancouver area were shutdown in the 1990s, along with a small refinery in Kamloops, which also happens to be along the Trans Mountain route.
The shutdowns have left BC's Lower Mainland with a huge shortage of refined products. Population in the region has grown to 2.6 million people, forcing the area to import most of their gasoline and jet fuel from Washington State. The Burnaby refinery processes about 55,000 bbl/day of light oil and has a very limited capacity to handle heavy Alberta bitumen.
Chevron did not book capacity on the Trans Mountain expansion line, which is still awaiting final approval from the federal government. The refinery's Unifor union is a vocal opponent of the expansion, expressing concerns that Chevron may close the plant completely if the new pipeline is built. Kinder Morgan is seeking to expand the capacity from 300,000 to 890,000 bbl/day, allowing for more crude oil and refined products to be shipped from Alberta to BC. Although the West Coast has some of the best refining margins in the world, expansion of the Trans Mountain line will likely increase the price of Alberta crude and lower the price of gasoline on the West Coast, reducing the crack spread and making the small refinery less profitable.
A spokesperson for Chevron says the company has made no official decision and is just testing the waters. The company has also put its Chevron-branded gas stations up for sale.
Aside from the Burnaby Refinery, BC only has 1 other small refinery in Price George owned by Husky Energy. The Prince George refinery has a capacity of 12,000 bbl/day.
Chevron has recently sold its Hawaii refinery and a 75% stake in its South African operations. Chevron, Shell, Exxon and BP have sold more than 1 million bbl/day of refining capacity in the past 3 years. Small refineries in developed countries are the most vulnerable to being sold or closed, as the oil majors shift to building and expanding large scale operations in the US and Asia.