Parkland buys Chevron refinery, fuel stations
• The refinery at the end of the controversial Trans Mountain pipeline is changing hands in a $1.46-billion deal between Parkland Fuel Corp. and Chevron Corp. announced Tuesday.
“Today’s announcement marks the third time in recent years that Parkland has acquired assets from Chevron,” Parkland Fuel CEO Bob Espey said on a conference call, referencing previous smaller deals to buy fuel stations from the San Ramon, Calif.-based oil major.
Red Deer, Alta.- based Parkland Fuel will acquire 129 Chevron-branded fill-up stations in the Vancouver area, marine fuelling stations and an aviation fuel business supplying the Vancouver International Airport in addition to the refin- ery for $1.46 billion.
Parkland will become Canada’s largest fuel retailer following the deal, which it is partly financing through a $ 660- million bought- deal share offering, a $500 million bridge loan plus other debt sources and cash. The deal is expected to close in the second quarter of this year.
The company has been buying up retail fuel stations across the country, including its purchase last year of Alimentation Couche-Tard Inc.’s Quebec and Atlantic Canada retail fuel business for $ 965 million.
In a release, Parkland described the assets in Tuesday’s deal as “key supply infrastructure” with pipeline access. The federal Liberal government approved a controversial $ 7.4- billion expansion of the Trans Mountain pipeline last year, which supplies crude oil to the refinery, tripling the pipeline’s capacity to 890,000 barrels of oil per day.
The construction of that expansion project has yet to begin but is expected to both boost throughput at the Burnaby refinery and boost Canadian oil exports from the West Coast.
Environmental groups and Burnaby Mayor Derek Corrigan have opposed the construction of the pipeline, but Corrigan has expressed hope the refinery would continue to operate once Chevron sold the facility.
Chevron had previously confirmed it was looking for a buyer for its refining and downstream assets in Western Canada.
REFINERY SUPPLIES PREMIUM GAS TO VANCOUVER AREA.
Espey said the refinery was a “key asset” that supplies premium, high- octane fuel to gasoline stations in the Vancouver area, which was one of the reasons why Parkland was interested in the deal.
More drivers i n urban centres like Vancouver burn premium fuel than in rural markets.
However, it is also scheduled to undergo a $ 100- mill i on maintenance period next year when it will be temporarily out of commission.
Parkland’s chief financial officer Mike McMillan said the 55,000 bpd refinery and complementary fuel distribution network would add roughly $ 230 million in earnings to the company.
Espey s ai d Chevron’s marine fuelling stations and terminals in B.C. would also help the company expand its current fuel network.
Chevron is rumoured to be shopping i ts oilsands interests in Alberta as it focuses on its shale oil assets in the U. S. and on its multibillion liquefied natural gas (LNG) terminals around the world.
Parkland Fuel’s shares fell slightly Tuesday to $ 28.86 per share, down roughly one per cent.