Canada’s Largest Oil Refinery Shut After Diesel Unit Blast

Irving Oil Corp.’s refinery in New Brunswick, a major supplier of fuel to the northeastern U.S., was shut after an explosion and fire in a diesel unit.

The hydrotreater, which removes sulfur from diesel to make fuel that meets environmental standards, was in the part of the refinery that was still running, while other units were shut for maintenance that had been planned for this month. Inventories along the East Coast of distillates, which include fuel used to heat homes, are already 15 percent below the five-year average, leaving homeowners vulnerable to higher bills.

The market will be waiting to find out “the severity of the damage,” said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. “If it’s something that is reparable quickly and within the normal measure of scheduled maintenance, it probably won’t change the supply circumstances of gasoline in New York. If it’s of long duration, it could. New York is very well supplied now.”

It’s too soon to tell how long the refinery and the unit will be down, Kevin Scott, Irving’s chief refining and supply officer, said in a press conference. Irving is working to minimize any impact on customers, using fuel it has in tanks and reaching out to other suppliers, he said. Four workers were treated for non life-threatening injuries at a local hospital.

Saint John is the biggest Canadian oil refinery, able to process about 300,000 barrels a day of crude. About half of the plant’s fuel is sent to the northeast U.S, making it a key provider of gasoline and diesel to New York and New England. In September, tankers hauled 2.78 million barrels of gasoline, 959,000 barrels of diesel and 119,000 barrels of jet fuel down the coast, according to U.S. Customs import data compiled by Bloomberg.

Gasoline futures on the New York Mercantile Exchange reversed an earlier decline to rise 0.4 percent to $2.0937 a gallon Monday, while diesel gained 0.1 percent to $2.3942.

Ample gasoline stockpiles along the U.S. East Coast may limit the price impact for motorists. Inventories in New England are above the five-year seasonal average, while tanks in New York Harbor are stuffed with the most gasoline for this time of year in U.S. government data stretching back to 1990.