2nd refinery for N.L. not dead yet
Judge dismisses application to put company behind proposal into bankruptcy
Last Updated: Tuesday, November 24, 2009 | 3:19 PM NT
CBC News
A company that had been trying to raise money to build a second oil refinery in Placentia Bay, on Newfoundland's southeast coast, has emerged from bankruptcy protection and been given two years to find a buyer or new partner for the project.
Newfoundland and Labrador Refining Corp., which is backed by St. John's-based mining company Altius Resources Inc., had started preliminary work on a new refinery between Come By Chance — the site of the existing refinery — and North Harbour in Placentia Bay.
The company had said the refinery would be able to process as much as 600,000 barrels of oil a day.
But within a few years of starting, the project saw its budget double, mainly because of rising costs, with company officials saying the price wouldn't be below $4 billion.
Work came to a halt when the recession hit. Creditors, such as SNC-Lavalin, went to court seeking to have the company declared bankrupt, claiming the company owed them more than $20 million and should be declared bankrupt.
Instead, Newfoundland and Labrador Supreme Court Justice Robert Hall, in his decision, gave the company another two years to attract a buyer, partner or other funding for the project.
Hall pointed out that the refining corporation had obtained all the necessary environmental and developmental approvals for the construction of the refinery, which would be the first new refinery to be built in North America in three decades.
He wrote, "I am satisfied that it was the collapse of the international global markets which lead to an inability on the part of NLRC [Newfoundland and Labrador Refining Corporation] to finance the construction project for this refinery."
Hall also said: "An economic recovery from that world economic crisis is occurring ... while it may be fraught with additional difficulties and roadblocks ... there now seems to be a reasonable degree of confidence that this crisis is just about over ... that augurs well for the future of this refinery project."
The proposal approved by the courts also involves the sale of tangible assets and the distribution of proceeds to creditors.
