Jobs go west as Imperial Oil converts Dartmouth refinery to terminal operation

Esso's refinery in Dartmouth, N.S. is seen at dusk on Friday, Feb. 4, 2011. (Andrew Vaughan / THE CANADIAN PRESS)

HALIFAX -- The Imperial Oil refinery in Halifax is being closed and converted to a terminal, in a move that deals the latest blow to Nova Scotia's manufacturing sector.

The company said Wednesday it expects 80 of the 200 workers -- ranging from engineers to mechanics -- to either retire or stay at the terminal, while 120 others will be offered jobs at Imperial refineries and oil sands operations in Ontario and the West or at ExxonMobil's operations off Nova Scotia's coast.

The refinery's flaming smokestack has been a familiar part of the city's waterfront on the Dartmouth side of the harbour for 95 years. Last May, the NDP government said it remained hopeful the facility might survive under new ownership.

The province also extended a five-year, tax-break deal just months before Imperial launched its year-long search for a buyer.

However, Gilles Courtemanche, vice-president of refining with Imperial (TSX:IMO), said the company decided to close the refinery because it couldn't find a buyer or see any realistic prospect of long-term profitability.

He also described the factory as lacking the ability to process the heavier portions of crude oil into diesel and gasoline, and too small to compete against massive producers in Asia and elsewhere.

"We have a great history. ... But with the kit that's there and the market conditions, it's no longer viable," said Courtemanche.

He said the refinery finds itself at the edge of an ocean where up to two million barrels of gasoline are available at competitive rates each day.

Meanwhile, refineries are being built in India that are capable of producing 1.2 million barrels daily, while the Dartmouth factory produces about 88,000 barrels, he said.

"This is a very difficult decision for Imperial, our employees and the local community ... We will make every reasonable effort to minimize the impact on our employees," said the vice president.

Courtemanche said the multinational company will continue to employ "some" of the roughly 200 contractors who work at the facility as the conversion and environmental cleanup takes place, but couldn't provide a precise figure on how many would keep their work.

The company said the conversion is planned for the third or fourth quarter of this year, depending on the progress of the modifications.

Once completed, the terminal operation will continue to supply existing terminals in Sydney, N.S., Corner Brook, N.L., Sept-Iles, Que. and Cap aux Meules in the Magdalen Islands, said Courtemanche.

The closure is becoming a familiar story in the province's industrial sector, as small, aging factories close and skilled, well-paid workers head west.

At one time, Nova Scotia had three refineries. Once the Dartmouth facility closes, it will have none. Other traditional industries are also exiting.

In December last year, the Minas Basin Pulp and Power paper mill closed in Hantsport, N.S., affecting 135 people in the town of 1,160. That came after Montreal-based Resolute Forest Products (TSX:RFP) announced the closure of its paper mill formerly known as Bowater in Brooklyn, N.S., throwing 320 people out of work.

Progressive Conservative Leader Jamie Baillie said the trend is worrying for the province.

"This is a major blow to our province and my heart goes out to the families who rely on those jobs," he said in a statement.

A non-recurring, after-tax charge of between $260 million and $280 million is expected to be included in Imperial Oil's second quarter reported financial results.

Courtemanche said the majority of those charges are due to the writedown of the assets of the refinery.