The Irving Oil Refinery in Saint John, N.B. Analysts and industry watchers speculate that Irving Oil may be planning to sell its two refineries in Saint John and in Ireland as part of a wide-ranging strategic review.Andrew Vaughan
The departure of key family members from leadership roles at Irving Oil Ltd., including owner and scion Arthur Irving, could herald a major shift for Atlantic Canada’s century-old oil refiner and retailer as it nears the completion of a formal examination of its operations and strategy.
On Tuesday, the Saint John-based company said Mr. Irving, who was the chairman of the board of directors, has left that role to become chairman emeritus. In a surprise move, his daughter Sarah Irving has also resigned. She was executive vice-president and chief brand officer. The departures follow Irving Oil’s announcement in June that it would conduct a wide-ranging internal strategic review that could result in the storied fuel supplier putting itself up for sale.
Irving Oil is one of New Brunswick’s largest employers. Its Saint John refinery has a capacity of 320,000 barrels a day, and the Whitegate refinery in Ireland has a capacity of 75,000.
The company also has a chain of more than 1,000 gas stations in Eastern Canada, New England and Ireland, as well as wholesale and fuel-trading businesses. And it operates the Canaport deep-water oil terminal on the north shore of the Bay of Fundy.
The strategic review comes as the global oil and gas industry tries to reduce its impact on climate. The Saint John refinery remains New Brunswick’s largest greenhouse-gas emitter, and the appetite among potential buyers for taking on such assets, and the associated costs of carbon emissions and the technology needed to slash them, is a big question mark.
Irving Oil did not respond to a request to discuss the timing of the strategic review or provide any more detail on the changes in leadership.
A non-domestic refiner or investor may have more interest in the company than a Canadian one. The refinery has no direct connection to Western Canadian oil production – it sources most of its crude from other countries. That makes such an acquisition a tough strategic fit for most domestic oil producers that also operate refineries.
Meanwhile, Imperial Oil Ltd. IMO-T, Chevron Corp. CVX-N and Cenovus Energy Inc. CVE-T have sold Canadian retail networks to companies that concentrate on that segment, including Parkland Corp. PKI-T and Alimentation Couche-Tard Inc. ATD-T. Both have been active acquirers.
Couche-Tard could be a buyer for Irving Oil assets. The convenience store giant sees itself as an industry consolidator and has enough dry powder to do a US$10-billion takeover without selling shares, the company’s chief financial officer said during a meeting with analysts last week. The United States remains a priority for Couche-Tard’s mergers and acquisitions, and the company would likely have more interest in Irving Oil’s U.S. operations than its Canadian ones.
Couche-Tard also has an existing relationship with Irving Oil. In 2018, the two companies struck a joint venture agreement that saw 36 Couche-Tard-controlled CST stores in Atlantic Canada rebranded to its Circle K name while selling Irving-brand fuel. The deal also saw Irving Oil take over ownership of 13 of these sites while Couche-Tard operated them.
Couche-Tard representatives did not respond to a request for comment Wednesday.
For its part, Calgary-based Parkland has said it plans to reduce its debt through 2024. The company has been dogged by activist investor Engine Capital LP, which has called for the company to try to do so through asset sales. Parkland declined to comment.
Rob Moir, an economist at the University of New Brunswick, echoes speculation that Irving Oil may be planning to sell its two refineries.
After all, he said Wednesday, companies routinely undertake strategic reviews, “so why is it that you’ve got a company that suddenly says, ‘Hey, we’re doing a strategic review’ out loud? The reason you say it is because you’re trying to float ideas.”
“My expectation is that what they’re getting ready to do is spawn off the refinery, and more fully embrace that world of greener energy forms,” Dr. Moir said.
“It’s looking at ‘What’s the fuel look like tomorrow?’ not ‘What’s the fuel yesterday?’ And if they can get rid of the oil refinery specifically, somebody else will take it over.”
Ms. Irving’s departure comes as a surprise to those who have watched the company’s development, as she was touted as the likely successor to her 93-year-old father Arthur as chair. She is widely seen as a driving force behind Irving Oil’s energy transition initiatives, which include publishing an annual sustainability report and other advocacy.
In the 2022 edition of that report, she is described as “a true champion of community and sustainability.” The document discloses greenhouse-gas emissions and governance and social initiatives, which is not a regulatory requirement for private corporations.
Irving Oil has launched other green initiatives over the past few years, such as installing solar panels and electric vehicle chargers at many of the gas stations it owns across Atlantic Canada. On the refinery side, it looked at integrating hydrogen at its Canadian and Ireland sites.
Last year, Irving Oil announced joint plans with Irish offshore wind-power developer Simply Blue Group to explore setting up a renewable energy hub into the Whitegate refinery. The two companies are examining the possibility of using wind power to produce hydrogen fuel.
In 2021, Irving Oil and Calgary-based TC Energy Corp. TRP-T signed a memorandum of understanding to undertake upgrades at the Saint John refinery aimed at cutting emissions, partly through low-carbon power generation. The two also said they would explore hydrogen production and carbon capture technology as part of the deal.
Last year, Irving Oil went a step further, buying a five-megawatt electrolyzer from New York hydrogen technology company Plug Power Inc. The decision to buy an electrolyzer, which is used to split water into hydrogen and oxygen, made it the first oil refinery in Canada – and one of the first in North America – to make such an investment.