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Irving Oil refinery general manager Mark Sherman announces the $220-million refit Friday. (CBC)

Irving Oil will spend $220 million to refit its Saint John refinery — the most expensive maintenance and upgrade project in the facility's 85-year history.

The announcement comes on the heels of the company's decision to shelve plans to build a second refinery in the city, citing a steady drop in demand.

"This is an extremely valuable investment in our refinery's future, to further prepare for the challenging market and industry conditions we are facing, and ensure the facility's viability for decades to come," refinery general manager Mark Sherman said during a news conference Friday.

The investment will strengthen the refinery's ability to serve markets in Atlantic Canada and the U.S. northeast through improving the facility's yield, or conversion to higher-grade fuels, such as ultra-low sulphur gasoline, he said.

The 60-day project, which got underway last week, will also employ up to 1,800 tradespeople during its peak, and generate an estimated $200 million in economic spinoffs, such as meals and accommodations, said Sherman.

Environmental concerns

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Workers doing maintenance and upgrades at the Saint John Irving Oil refinery. ((CBC))

But it all comes at a cost, said clean air activist Gordon Dalzell.

It will increase some of the refinery's carbon emissions, he said. Although company officials say it will be by less than one per cent, that's still too high, said Dalzell.

"They're going in the wrong direction," he said. "This refinery, if you're going to do any maintenance, or any kind of changes, should put in the type of technology that will guarantee a decrease in emissions. Because you look at a refinery like this, in the middle of a neighbourhood, thousands of people living by, we cannot afford to have even a slight increase in emissions.

"We're going to pay the price in the long run."

Dalzell questions why the provincial Department of Environment gave the project the green light, despite the increase in pollution. He contends the refinery should only be allowed to make changes that will lower emission levels.

Energy Minister Jack Keir was quick to defend the province's position.

"Our government and the Minister of Environment Rick Miles has a plan in place for climate change. We're following that plan and we're on target for that plan," he said. "And this is a good news story today for the province of New Brunswick in terms of investment."

The project, which will run 24 hours a day, seven days a week, will include work on the residue catalytic cracking unit and gasoline desulphurization unit to enhance their processing reliability and efficiency, said Sherman.

There will also be general maintenance on the other refinery units, which is expected to reduce flaring and "fugitive" emissions.

"Our units are maintained to the highest standards, but this combination of maintenance work and investment will allow us to enhance their reliability and overall performance," he said.

"This work also sets a foundation for other potential investments."

About 75 per cent of the workers are expected to come from within New Brunswick, with the others coming from Western Canada, said Sherman.

Efforts will be made to minimize any noise, odour and site impacts during the project, which runs until November, he said. Anyone with questions or concerns can call the refinery's 24-hour information line at 202-3000.

Three years ago, the refinery underwent a $50-million refit, which allowed it to produce ultra-low sulphur diesel fuel.

The Saint John refinery is the largest in Canada, stretching over 780 acres. It produces more than 300,000 barrels of refined petroleum products a day.