Fire, injuries at U.S. refinery add to Husky operational woes
Calgary-based producer takes defensive posture
CALGARY • Multiple people were injured and some transported to hospital on Thursday after a fire broke out at Husky Energy Inc.’s refinery in Superior, Wis., putting the Calgary-based oil producer on the defensive, as it argued there were no known commonalities between the accident and other recent operational mistakes.
“There was a fire and the fire is out. Everyone has been accounted for. There were some people injured but we don’t know the extent of the injuries,” Husky president and CEO Rob Peabody said following the company’s annual meeting in Calgary on Thursday.
Peabody said he didn’t know what caused the fire and couldn’t confirm what local media in the area were reporting — that the fire was preceded by an explosion that could be felt up to a mile away from the site and that seven ambulances were on the scene.
Burning asphalt at the refinery prompted the evacuation of much of the town of about 27,000. Local officials say the evacuations are a precaution as a plume of noxious black smoke drifted southward from the plant.
Husky bought the 50,000-barrels-per-day Superior Refinery last year for $435 million to process more of the company’s heavy oil production. It had been shut down for planned maintenance at the time of the fire on Thursday.
Western Canada Select, the Canadian heavy oil benchmark’s discount against the U.S. crude, widened to $17.40 per barrel, its highest level since the start of the month.
Peabody also said he didn’t believe there was any connection between Thursday’s fire and other operational issues that have landed Husky in trouble with regulators in recent years, including a near-miss with an iceberg at a platform offshore Newfoundland and a large oil spill in Saskatchewan in 2016.
Husky faces 10 charges from its pipeline spill in Saskatchewan.
“The pipeline incident in Saskatchewan was one where the ground shifted and it caused the pipeline to fail, so I’d be surprised if there was any ground shifting involved in this one,” Peabody said. He also said the iceberg near-miss in Newfoundland was a different series of events.
The Canada-Newfoundland and Labrador Offshore Petroleum Board also reprimanded the company in January for not evacuating an offshore platform when an iceberg drifted too close to the facility last year.
Thursday’s fire overshadowed the company’s financial results, which were less affected by large discounts for Canadian heavy oil than other domestic producers.
“Husky remains the only heavy oil producer that we believe could be a (modest) net beneficiary from our expectation of persistently wide heavy oil differentials, owing to the company’s sizeable refining operations and pipeline capacity, providing excess downstream egress over and above the company’s heavy oil production,” Raymond James analyst Chris Cox said in a research note.
Peabody said the company’s refineries helped “shield” it from the big discounts other Canadian producers face, which have been as wide as $30 per barrel at various points this year. The discount between Canadian heavy and the West Texas Intermediate benchmark was $21.96 per barrel when markets closed Wednesday, according to GMP FirstEnergy.
“As we expand our heavy oil production, we will look for opportunities downstream,” Peabody said of potentially buying more refining capacity.
Husky reported net earnings of $248 million for the first quarter on Thursday, up 249 per cent from the $71 million in net earnings the company recorded for the same period a year earlier.