Husky looks to sell BC refinery and exit the retail business
Husky Energy has hired TD Securities to help it find a buyer for its Prince George Refinery and over 500 Canadian retail and fuel distribution outlets.
Divesting simple refineries, investing in higher conversion capacity
The 12,000 bbl/day Prince George refinery processes light oil, producing products for central and northern BC. Husky calls the facility "non-core" since it doesn't process heavy oil.
Husky's "Integrated Corridor" hedges its heavy oil production with heavy oil refining capacity. The company's Lloyd facility and three refineries in the US Midwest run on a diet of 48% heavy oil, rising to 55% by 2022. The company purchased a 50,000 bbl/day refinery in Superior, WI, for US$435 million in 2017. The refinery processes a blend of Canadian heavy crude and light Bakken crude from North Dakota. Husky is also planning to increase heavy oil processing capacity by 30,000 bbl/day at its Lloyd facility and another 30,000 bbl/day at the Lima refinery in Ohio.
Husky is still working towards its $6.4 billion takeover of MEG Energy, potentially adding another 100,000 bbl/day of heavy oil to its upstream production. The company stresses this proposed divestiture of the BC refinery and its Canadian retail business is not contingent on the MEG acquisition.
A tale of two refineries
There are only two refineries in BC - Husky’s Prince George facility and a second refinery located in the Lower Mainland. In the spring of 2017, Chevron Canada sold its 52,000 bbl/day Burnaby Refinery and 129 retail gasoline stations to Parkland Fuel for $1.46 billion.
According to several analysts firm, Husky’s Canadian downstream assets, including the refinery, are worth an somewhere between $800 million and $1 billion.