Husky purchases additional Midwest refining capacity and defers Canadian expansion
Husky Energy has reached a deal to buy a refinery in the US Midwest and several logistical assets from Calumet Specialty Products Partners for US$435 million in cash plus contingency payments for working capital, inventories and a portion of Calumet's capital spending.
The 50,000 bbl/day Superior Refinery processes light crude from the North Dakota Bakken shale and heavy crude from Western Canada, producing gasoline, diesel, asphalt and heavy fuel oils. The transaction includes various truck, rail and marine terminals, a pipeline connection to the Magellan system, crude gathering assets in North Dakota, and various rail logistics assets.
Husky CEO Rob Peabody says the deal will "increase Husky’s downstream crude processing capacity, keeping value-added processing in lockstep with our growing production." The Superior Refinery connects to Enbridge's Mainline, allowing Husky to derive more benefit from the heavy/light oil differential.
The company has also deferred a decision on expanding asphalt capacity at its Lloydminster refinery until after 2020. The expansion would have doubled the facility's capacity to 60,000 bbl/day.
Husky currently produces about 320,000 boe/day, more than half heavy crude from its thermal and non-thermal facilities in Western Canada. The company is working towards increasing output to 400,000 boe/day by 2021. Once the deal with Calumet closes, Husky's total refining capacity will increase to 395,000 bbl/day, about 70% located in the US Midwest.
Calumet says the divestiture will allow it to focus on becoming "the premier specialty petroleum products company in the world". Husky has committed to retaining all 180 Calumet employees.
HUSKY ENERGY HUSKY AGREES TO ACQUIRE US MIDWEST REFINERY; INCREASES VALUE-ADDED PROCESSING CAPACITY AUG 14, 2017
CALUMET CALUMET SPECIALTY PRODUCTS PARTNERS ANNOUNCES AGREEMENT TO SELL SUPERIOR REFINERY AND RELATED ASSETS AUG 14, 2017