Shell Canada is converting its Montreal refinery into a storage centre for gasoline, diesel and aviation fuels, spelling the end for the 76-year-old facility after it failed to attract a buyer.
Job cuts are expected at the company's largest Canadian plant, with union representatives expressing concern that the overwhelming majority of its members will be left without work once the conversion is complete.
The oil giant announced its decision on Thursday, after a months-long review of the Montreal East facility, which employs about 450 people, as well as some private contractors.
"Shell's preferred option was to sell the refinery, and despite significant efforts to market the facility to a number of parties, no buyer was found," Shell spokesman Larry Lalonde said.
Shell's parent company Royal Dutch Shell initially announced last summer that its Montreal refinery was part of a larger group of assets under "strategic review."
Employees were told about the conversion on Thursday. The plant will be able to operate with fewer workers, so "there will be less employees in the long-term" Lalonde said. "We don't have a number on what that'll look like."
As few as 30 employees will probably be retained, predicted Jean-Pierre Rocheleau, president of Local 121 of the Communications, Energy and Paperworkers Union of Canada.
Others will be eligible for buyouts — and the rest will be offered retraining. The union intends to lobby all levels of government to intervene in the plant conversion. "Economically, we can't permit this refinery to close," Rocheleau said.
The Montreal refinery — Shell's biggest in Canada — can process up to 130,000 barrels of crude oil every day, injecting some $200 million a year into the city's economy.
Surplus capacity in the refining sector has forced many companies to try to sell or shut down smaller refineries in favour of larger facilities, oil analysts say. Oil companies are turning to crude and natural gas exploration and production instead.