Husky to buy refinery in Superior Wis for US435 million in cash
CALGARY — A US$435-million deal to buy a refinery in Wisconsin will allow Husky Energy (TSX:HSE) to match processing capacity with its growing heavy oil output while postponing a planned asphalt plant expansion in Alberta.The 50,000-barrel-per-day refinery in Superior, Wis., is being purchased from Calumet Specialty Products Partners of Indiana in a deal expected to close in the fourth quarter, the companies said Monday.“Acquiring the Superior refinery will increase Husky’s downstream crude processing capacity, keeping value-added processing in lockstep with our growing production,” Husky CEO Rob Peabody said in a statement.Husky’s heavy oil production from Alberta and Saskatchewan is currently about 170,000 barrels per day, but that will increase by about 40,000 bpd over the next three years, spokeswoman Kim Guttormson said.The Superior refinery deal will grow capacity to refine heavy oil to about 205,000 bpd, she said. Overall downstream capacity, including light and medium grade oil refining, is to rise to about 395,000 bpd, with 275,000 bpd in the United States.Husky owns a heavy oil upgrader and asphalt refinery in Lloydminster, on the Alberta-Saskatchewan border, as well as a light oil refinery in Lima, Ohio, and a 50 per cent stake with partner BP in a heavy oil refinery in Toledo, Ohio.The Superior refinery produces about 9,000 bpd of asphalt, 17,500 bpd of gasoline and 10,900 bpd of diesel, as well as heavy fuel oils.Husky has been contemplating an expansion of its asphalt refinery in Lloydminster to double production to about 30,000 bpd of asphalt.A decision on the Lloydminster expansion, estimated to cost $800 million to $900 million, was expected next year, but will now be delayed until after 2020.Analysts gave the acquisition passing marks Monday for its effect on Husky’s ability to capitalize on growing asphalt demand from increased infrastructure spending across North America.Guttormson said asphalt is transported by rail and can easily be moved across the border to where it is in demand.Husky plans to retain the approximately 180 workers at the refinery, which has direct pipeline connections to the company’s transport terminal in Hardisty, Alta.Follow @HealingSlowly on Twitter.