Evidence of meeting #26 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was shell.
A recording is available from Parliament.
12:15 p.m.
Business Development, Delek US Holdings
The part that needs to be done by next spring is not that; it's the $50 million.
12:15 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Okay.
You say you have one existing refinery asset and two terminals.
12:15 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
How large is the output of your existing refinery, and where is it located?
12:15 p.m.
Business Development, Delek US Holdings
It's in Tyler, Texas. It's a brand at 60,000 barrels a day.
12:15 p.m.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Okay, 60,000 barrels a day.
I have one last question, and then I think Mr. Wallace wants to ask a question as well, so I'm sharing the time.
In Shell's testimony just a while ago, we were hearing there were three or four assets. If, for example, they closed the refinery and went to a terminal operation, some of the assets—and they listed a few—could be sold off to other places. Could you speculate on the amount of money that could be received from buying that asset and selling off the pieces?
12:15 p.m.
Conservative
The Chair Conservative Michael Chong
Thank you very much, Mr. Boles.
Thank you, Mr. Allen.
Mr. Wallace.
12:15 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
I have one quick question. We've been talking about capacity and about customers. What percentage of the gasoline production at this Montreal East refinery goes south of the border? I'm assuming you know that.
When you're talking about customers, is that the customer base that you're interested in maintaining and that's why the place has to continue to operate so that those customers rely on your supply and then you'll be the new supplier?
12:15 p.m.
Business Development, Delek US Holdings
We've not been given access to a large number of the contracts, so I don't know.
12:15 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
You have no idea, after you've offered $150 million, what percentage of the gasoline produced at that plant goes south of the border?
12:20 p.m.
Business Development, Delek US Holdings
You mean what those customers do with the gas once we sell it?
12:20 p.m.
Business Development, Delek US Holdings
Then I would answer yes, I don't know that.
12:20 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
Well, to me that means you haven't gotten very far in your discussions, if you don't even know the different percentage of the customers, whether they're internal, external, how much is in aviation gas, how much is in gasoline production.
Anyway, I appreciate your honest answer.
12:20 p.m.
Conservative
The Chair Conservative Michael Chong
Thank you very much, Mr. Wallace.
We'll now go to Mr. Laframboise.
12:20 p.m.
Bloc
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Thank you, Mr. Chairman.
My question is addressed to you, Mr. Fortier.
Like me, you heard Mr. Boles state earlier that on June 21, at what were probably the final discussions, it was known that the refinery would shut down because of inadequate maintenance.
I have a problem with this when I look at it. First of all, it seems to me that Shell's decision had already been made. They wanted to convert the refinery to a terminal. They did absolutely nothing to maintain the refinery.
When you were told that the refinery was for sale for between $150 million and $200 million, were you told that it was a refinery that had to be operational or was it known right from the outset that the refinery would not be operational?
July 20th, 2010 / 12:20 p.m.
Chairperson, Follow-Up Committee of Shell Refinery
I did not see the documentation, nor was I a party to discussions between Shell and the companies that signed a confidentiality agreement with Shell—not just Delek; there were several of them. I was not present for those calls or those meetings, but to my knowledge, Shell did inform those companies that the equipment would have to be upgraded.
In any case, the companies that had enough of an interest in the assets to sign a confidentiality agreement are companies that are well acquainted with the market. And that is one of the first questions they would have asked, in any case. So, there was no attempt to conceal the fact that some upgrading would be required.
12:20 p.m.
Bloc
Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC
Based on Mr. Boles' comments, one has the sense that, in any case, Shell was not willing to give any extension.
Mr. Boles, if I understood you correctly, you wanted some time so that Shell could make its refinery operational again or you wanted some time and a price adjustment to be able to move forward with this. I gather that was the issue in the final negotiations.
12:20 p.m.
Business Development, Delek US Holdings
The problem was that we won't pay a purchase price for a closed refinery. That's where we are. Shell's view was that this refinery's going to have to be closed, and our view was that we don't think we'll be paying for a closed refinery.
12:20 p.m.
Conservative
The Chair Conservative Michael Chong
Thank you very much, Mr. Boles.
Mr. Laframboise, Mr. Bouchard would like to ask a question.
12:20 p.m.
Bloc
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
Thank you, Mr. Chairman.
I have a brief question for Mr. Fortier.
First of all, I know you worked very hard, even though you were unable to secure a positive result or outcome from this process.
Do you believe the federal government could have applied greater pressure or played a role in helping to secure a positive result—in other words, to ensure that the sale would be finalized? There was a buyer and Shell was possibly interested in selling.
12:20 p.m.
Chairperson, Follow-Up Committee of Shell Refinery
The federal government sat on the committee along with officials from other levels of government. It offered the committee its support—unconditional support—just as the other levels of government did. To my knowledge, the Minister of Natural Resources was in contact with Shell officials at various levels throughout the process. And, as I recall, at the end of the process on June 1, when two formal offers were made—one from Mr. Boles and one from another company—the Minister communicated in writing with senior management at Shell to say that he was very pleased with the outcome and let them know he was following developments.
So, Mr. Bouchard, in terms of what I needed to ensure our committee could do its work, I must say I enjoyed excellent cooperation not only from Ottawa, but from Montreal, Montreal East and Quebec.