Irving Oil extends construction date for proposed 2nd refinery

Irving Oil Ltd. is extendingits target datefor a proposedsecond oil refinery to eight years from four because of a labour shortage in the Saint John area.

Irving Oil made the announcement at an open house on Thursday in Saint John that was intended to update local residents on the second refinery project, known as Eider Rock.

Kevin Scott, Irving Oil's director of refining growth for oil, told the crowd the new timeline will make the project "more viable at a time when many energy projects are being delayed or cancelled."

The company had always intended to make a final decision on whether to push forward with the $8-billion refinery next year, with construction starting in 2011.

'Slow and steady is perhaps the one that wins the race." Tim Curry,president of the Atlantica Centre for Energy

If the project does move forward, the company would break it into two phases, each lasting three to four years to complete. Each of those phaseswould be worth $4 billion and peak construction would hit 2,500 to 3,000 jobs.

"We would construct Phase1, and start it up and have it operating," Scott said."And then at some point during Phase1, we would make a decision on Phase 2."

The first phase would produce half the intended amount of oil a day, 150,000 barrels. The company'scurrent refinery processes 300,000 barrels of oil per day and is the largest in Canada. The company is also considering producing more diesel.

Along with citing the labour shortage in the area, Irving Oil said it is extending the construction period as a result of global competition, rising capital costs and limited availability of material.

Irving announcement 'good news': Keir

Energy Minister Jack Keir said he doesn't view the longer construction period as a setback.

"The fact of the matter is, this is good news that they are coming up with a plan that still makes this, at this time still work and move forward," Keir said.

The energy minister said labour availability has been a major concern of his since some of the major energy projects in southern New Brunswick have been announced.

Workers are already needed for the $1.4-billion refurbishment of the Point Lepreau nuclear station and the $1.6-billion Potash Corp. mine, while there was concern about whether enough workers could be found for potential projects such as the second oil refinery and a second nuclear reactor.

"The upside to this economic [slowdown] that is going on in the world, if there is an upside,it may free up some of those tradespeople from jobs [at large projects] that won't go forward and this one does; it will give an opportunity to bring those folks home," the energy minister said.

Tim Curry, president of the Atlantica Centre for Energy in Saint John, said a longer construction period may actually benefit the project in the long term.

"Slow and steady is perhaps the one that wins the race," Curry said. "To me that's encouraging because that means people are engaged, they are not going with the first [project] out of the gate plan and they are modifying the plan in the light of fuller knowledge."

Local businesses and all three levels of government havepartnered in the Benefits Blueprint initiative, a study that mapped out how the region would deal with issues, such as labour availability, if all of the projects moved ahead.

The study examinedwhat the region would need to do in order to capitalize on the economic activity without experiencing any problems, such as housing shortages or a lack of services.

In March, Irving Oil announced that international oil giant BP were partnering together on the project. BP is contributing $40 million to the next phase of engineering, design and feasibility for the proposed refinery.