What we know, and don't know, about the environmental deal at Come By Chance
Indemnity covered by N.L. taxpayers extended to 2031, and capped at $180M
There was big news this week for the long-idled Come By Chance oil refinery.
A new company will take on a majority stake of the operation, and shift to renewable fuels.
The current owner will keep control of the aspect of the business that imports and distributes fuel into the province, such as gasoline.
To help make all this happen, the province agreed to a deal on a new environmental indemnity for the operation that will cover certain pre-existing problems there.
We've been reporting on potential environmental concerns at Come By Chance for the past few months, so Tuesday's news conference gave us the chance to ask the owners some questions for the first time in person.
We'll get to that in a moment. But first, according to the province, here are the highlights of the just-announced agreement:
- The new deal amends a previous indemnity from 2014, the last time the refinery was sold. It is for 10 years, expiring in November 2031, and covers the same lands as the last agreement.
- The indemnity encompasses historical contamination prior to Cresta Fund Management's acquisition into the refinery to October 2021.
- There are two separate time frames incorporated into a new overall cap of $180 million that Newfoundland and Labrador taxpayers could potentially be on the hook for: historic contamination up to November 2014 is capped at $150 million, while the period from December 2014 to October 2021 is capped at $30 million.
- Officials said the province's exposure could reduce over time based on the profitability of the refinery and logistics sides of the operation.
- New environmental site assessments for both the pre- and post-2014 periods are due within 18 months.
In return, here are the commitments the province says it got from the deal:
- Employment levels at no less than the equivalent of 200 full-time employees.
- Fuel supply to the island portion of Newfoundland and Labrador.
- Maintaining of the operations of the refinery.
"This is a positive step, as the province itself looks to transition into a greener economy," Premier Andrew Furey said at the announcement.
"It's wonderful news for the province and ensures a bright future for the refinery and its workers."
Public indemnity, private information
While the agreement potentially puts taxpayers on the hook for up to $180 million in liabilities, it doesn't mean they will be able to see the information in those environmental site assessments outlining the scope of any problems.
"We'll obviously comply with whatever regulations are applicable," said Kaushik Amin, partner with Silverpeak.
"Beyond that, we're a private company, so we have to make sure that, you know, everybody respects the private nature of the company."
The premier pointed to the importance of the cap and the "upside protection" in the deal tied to the profitability of the operation.
"Of course, it is still a private commercial business, as Amin has said," Furey noted.
The government had previously committed to release those reports the last time the refinery changed hands, in 2014, but has since walked back that pledge.
- N.L. taxpayers took on a refinery's environmental liabilities. A report outlining them is 6 years overdue
The last time the province signed an environmental agreement with the refinery owners seven years ago, the entire 30-page document and 120 pages of schedules and supporting information — including the company's business proposal and spending plans — were posted on the government's website.
CBC News asked the province if that would happen this time as well but didn't receive a response by Friday afternoon.
The government also did not answer questions about how its environmental indemnity exposure can reduce over time, based on the profitability of the operation — including details of what mechanism or formula is in place, and how that will be tracked.
Inspections ID'd as past concern under prior owners
More than seven years ago, government officials identified the tank farm as the greatest environmental concern associated with refinery operations at Come By Chance.
They pointed to previous non-compliance with inspection requirements by former owners, going back decades.
When CBC News attempted to find out more about what has happened in the seven years since, Silverpeak declined interview requests, and would say only that they were fully compliant with all environmental rules and regulations.
At this week's announcement, we got the opportunity to ask that question to Amin.
CBC News: "Back in 2014, before the last sale, the province identified the tank farm as the greatest environmental concern associated with refinery operations. Can you address what's been done to ensure those problems have been addressed, and the in-service tanks have been inspected and are up to date, and safe in accordance with industry standards now?"
Amin: "I don't have the exact numbers in front of me. But when we acquired the refinery back in 2014, like 80 per cent of the tanks had not been inspected in their inspection intervals. So we put together a long-term plan. There's only so much bandwidth you have to inspect and remediate any individual tank, right? So we put together a plan.… It's an ongoing process. Every year you re-certify and you work on a certain number of tanks. We work very closely with the Department of Environment. We are fully compliant with all the rules and regulations around tank certification. But it's a continuing process. It's not something that you can just turn the switch in one fine day and just remediate every tank. So we have, like I said, remediated over 25 tanks under our ownership, and every year we keep adding to that list."
Jim Stump, president of Braya Renewable Fuels: "I would jump in as well and say that all of the tanks that we're repurposing for the project, and it's quite a few, every single one of them will — if it's not current with its inspection — it will be before we start back up."
The status of Tank 106
We also got the chance to ask about the status of a partially collapsed, out-of-service tank near the edge of Placentia Bay.
In a June 2014 presentation to the province, the incoming owners indicated that "Tank 106 will be repaired immediately," and $9 million would be spent to complete that work by the end of 2015.
CBC News: "Are there any plans to do anything about Tank 106, that's the out-of-service tank at the edge of the water there with the partially collapsed roof and the sludgy product inside? Or is that going to be status quo going forward?"
Amin: "So it's a part of the overall plan that we continue to remediate every tank and there's a certain amount of work that is done on Tank 106. And it's a continuing process. I cannot give you a fixed timeline when that tank will be brought back into service. But you know, it's something that is an important part of the maintenance plan of the facility. And it'll get done in a little bit of time.… We've put in a fair bit of effort into removing some of the sludge in Tank 106. Tank 106, the roof had collapsed even before we acquired the refinery. And we've been sort of chipping away at it every year. It's a complicated process … and a large portion of the workforce has been involved in that. It's an ongoing process."
Amin said the tank is not an environmental hazard.