Shell hammered at hearing over refinery
Produced 90,000 barrels per day. Company must dismantle refinery and decontaminate soil
By KEVIN DOUGHERTY,
The Gazette
October 20, 2010
Nicolas Houle, director of Shell Canada's Montreal East oil refinery, got a rough ride yesterday at special National Assembly hearings challenging the company's decision to shut down the facility.
"Why should I give you a permit to dismantle it?" asked Natural Resources Minister Nathalie Normandeau.
"We feel we have been tricked, fooled and demoralized," added Nicole Leger, the Parti Quebecois MNA for Pointe-aux-Trembles riding, where the refinery, with a payroll of 500, is located.
"I remain convinced there are buyers," Leger added, suggesting Shell did not invest in the refinery, making it unattractive to potential buyers.
Houle replied to Normandeau that under Quebec's environmental laws, Shell must dismantle the 77-year-old refinery now that it has closed, and must decontaminate the soil.
He said the decision to get out of the refining business in Montreal was motivated by a global strategy, in the interests of Shell shareholders, to shift upstream, focusing on the crude oil end of the business rather than refined products.
Normandeau noted Shell had no trouble selling two refineries in France, asking why it could not sell the Montreal facility.
Houle said "eight or nine" potential buyers approached Shell, resulting in two "declarations of interest," but no offers.
He said the inventory of the refinery in worth $400 million and it would require investments of $600 million to remain competitive.
"I'm a straight shooter," Houle told the committee, saying Shell looked into adapting the Montreal refinery to handle Alberta tar-sands.
"Montreal was not the place to make this investment," he said.
Jean Matuszewski, an economist with E&B Data, told the committee that with the Shell refinery, Quebec was a net exporter of refined petroleum products. Quebec's three refineries produce 369,000 barrels of gasoline, diesel, heating fuel and other products a day.
Quebec consumes 309,000 barrels of those products daily, leaving a 60,000-barrel surplus available for export, Matuszewski explained.
The Shell refinery accounted for 90,000 barrels a day and Quebec now has a 30,000-barrel deficit, he said, creating a problem of security of supply and the potential for higher prices.
Normandeau disagreed, presenting figures indicating that with Shell, the province had nearly 50 per cent overcapacity in refining.
With Shell closed, that surplus shrinks to about 11 per cent, the minister said, adding that Shell has assured her closing of the Montreal refinery would not jeopardize Quebec's security of supply.
Amir Khadir, the Quebec solidaire MNA, noted that BP offered assurances which proved unfounded after its Gulf of Mexico oil spill, suggesting big oil companies do not always tell the truth.
kdougherty@montrealgazette.com
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