The future of Burnaby's Chevron refinery could be in peril from a burgeoning demand for Canadian crude in Asia.
"Concern is that the refinery may scale back its operations and that there's not a steady supply of oil," said Russ Day, from the union branch representing the refinery workers. "Eventually, Chevron may deem the refinery a non-viable asset and turn it into a terminal."
Burnaby's Chevron refinery gets oil from Kinder Morgan's Trans Mountain pipeline, which ships petroleum products from Alberta to Burnaby. Kinder Morgan also runs the Westridge Marine Terminal, where tankers fill up with oil for overseas markets.
Chevron spokesperson Ray Lord said there wouldn't be job cutbacks at the refinery, but he was not able to comment on reduced operations.
"We don't comment routinely on our operating capacity, that's all commercially sensitive information," he said. "We never comment on that."
Kinder Morgan's pipeline has been "oversubscribed," meaning demand for oil outstrips the pipeline's daily maximum capacity of 300,000 barrels. Chevron has been struggling to get its share of the oil.
Day expects that by March, Chevron will not be able to get enough oil to run the plant continuously.
"We'll have to take rotating outages," he said. "They'd have to shut the refinery down until there's enough oil to run it."
Burnaby-Douglas MP Kennedy Stewart told the NOW he's been in contact with refinery workers and that Chevron has had a tough time competing with offshore companies for access to the pipeline's oil, and has had to reduce operations as a result.
"It looks like this refinery may be in danger of closing," Stewart said. "If, for example, Kinder Morgan twins the pipeline, it means that the way the oil is sold, basically Chevron will not be able to compete with the offshore investors. It's kind of a paradox. We'll be moving more oil along the West Coast, but because of that, we'll be attracting outside investors, and they will outbid our local investors."
According to Stewart, if the refinery doesn't run at a certain capacity then it is not financially viable and operations could be suspended.
"It doesn't have to be that it's all the oil that's cut off, but if it's a certain proportion that's cut off, a critical mass they have to refine in order to be profitable, if it drops below that level, they shut it," he said. "We've had refineries shutting right across Canada for basically same reason."
Stewart, NDP associate critic for natural resources in Western Canada, said Canada has been losing one refinery a year since 1980.
"We're in this absurd position where we export our crude oil and buy it back as gasoline," he said.
Stewart said Chinese refineries are state-owned and subsidized and it would be difficult for Canada to compete.
"It's not exactly an even playing field," he said.
Stewart brought forward a motion before the standing committee on natural resources asking for a study on the current and future state of pipelines and refineries in Canada, and the Conservatives agreed to four days of hearings on the matter. Feb. 1 was the first day of hearings, and on Feb. 2 the Communications, Energy and Paperworkers Union of Canada is scheduled to present as a witness. The CEP union represents Canada's refinery workers, including those at Burnaby's Chevron refinery.
There are 250 employees at the Burnaby refinery, which is one of two left in the province.
Lord reiterated that there were no plans for layoffs in March, but he couldn't offer any information beyond that.
"There are no plans for labour reductions at the refinery at this time," he said.
When asked if the refinery could be closing, he replied: "We're watching it closely, we're looking at all our options," he said. "Beyond that, I really can't comment."
