The Dalhousie generating station may not survive past this year despite last week's collapse of the proposed deal to sell parts of NB Power to Quebec. (CBC)

The Dalhousie generating station in northern New Brunswick is unlikely to be spared closure despite the collapse of the proposed agreement between NB Power and Hydro-Québec.

The facility's fate — and the jobs of the roughly 90 people who work there — was sealed last October. That's when New Brunswick Premier Shawn Graham announced the station would be shuttered on the day the memorandum of understanding was signed to sell parts of NB Power to Hydro-Québec.

Under the deal, Dalhousie's 300-megawatt facility would be shut down after the plant's fuel contract with Venezuela's state-owned oil company expires in June.

Now that the NB Power deal is dead, the Liberal government is not expected to offer the plant a reprieve.

Liberal cabinet minister Donald Arseneault, the MLA for Dalhousie-Restigouche East, said on Friday, two days after the deal's collapse, that the plant's design is good until 2025.

However, he added, an expensive conversion to burn another kind of fuel doesn't make financial sense.

"You only have 15 years of lifespan in that plant so whatever investment you have to make in order to convert, you have to have a return on investment within that time frame," Arseneault said.

The loss of another 90 jobs would add even more pain to the small northern community, which has been dealt a series of closures by major employers in recent years.

Dalhousie's AbitibiBowater mill shut its doors in January 2008, throwing 330 people in the town of 3,600 out of work. Two months later, Olin Corp. closed two of its chemical plants, eliminating another 100 jobs.

Searching for cheap fuel

The Dalhousie power station was originally built to burn Orimulsion, a cheap water-and-bitumen mixed fuel that is produced only in Venezuela.

The Venezuelan government decided to halt export of Orimulsion, a decision that led to the Coleson Cove controversy in 2004. The former Progressive Conservative government got caught starting the plant's $747-million refurbishment to burn the fuel without a signed contract with the Venezuelan government.

Orimulsion never made it to Coleson Cove and that forced NB Power and the Venezuelan government to settle the contract dispute in court.

The Venezuelan government also stopped shipments of Orimulsion to Dalhousie, but lived up to a clause in the pre-existing contract that saw the state-owned oil company replace the fuel with discounted oil.

That discounted oil supply will expire in June, when Dalhousie would be forced to begin burning expensive oil.

NB Power has been looking at alternative low-cost fuels for the northern power plant.

The Crown corporation has experimented in Coleson Cove with mixing heavy fuel oil and petroleum coke as a way to reduce fuel costs. Although NB Power has reported success, the fuel is still costly enough that the plant only runs at partial capacity.

Sale of plant a long shot: Keir

The NB Power deal with Quebec made it clear that the Dalhousie station couldn't be sold as a power plant to another buyer. Now the power deal is off the table, Energy Minister Jack Keir said it's a long shot that the plant will be sold.

"The issue becomes if it's not feasible for NB Power to operate that, is there anybody else out there? If there is, we'd be more than willing to take a look at it, but I'm not sure there is," Keir said.

NB Power recently announced that its coal-fired Grand Lake generating station would close three months earlier than expected, after a fire caused damage to the 79-year-old power plant.

The closure cost the 37 people working at the power plant and 57 people at NB Coal their jobs. However, NB Power offered some of the workers severance packages or jobs elsewhere in the utility.