The cost to rebuild Superior's fire-damaged oil refinery just keeps climbing and is now at $1.2 billion, around three times the original estimate.
Owner Cenovus Energy said Wednesday that the bill to fix the refinery — site of a spectacular 2018 explosion and fire — has risen from its last estimate of $950 million.
High labor costs, COVID-related expenses and inflation and supply-chain constraints all contributed to the cost runup, Calgary-based Cenovus said in its earnings release on Wednesday. Cenovus became the refinery's owner when it bought Husky Energy in early 2021.
Husky Energy had originally estimated in April 2019 that rebuilding the refinery would cost more than $400 million.
Four years ago this week, a hole in a valve at the refinery caused an explosion and fire that injured 36 people and cast a dark plume of smoke high into the sky as asphalt burned for several hours.
Large parts of the city of Superior were evacuated for fear of leaks of hydrogen fluoride, a highly toxic chemical.
Husky, which had purchased the refinery only a year before the explosion, started rebuilding it in the fall of 2019. However, due to the onset of COVID-19, Husky stopped work on the project for about three months in the spring of 2020.
By that time, the price of refinery repairs had risen to $750 million, due to "additional modernizations and enhanced safety features," Husky explained then. Husky had planned to reopen the Superior refinery in 2022.
Cenovus said Wednesday it expects to fully restart the refinery in the first quarter of 2023.
The 71-year-old plant, which employs around 200, is the only oil refinery in Wisconsin and a major source of gasoline and other oil products, including asphalt, in the Twin Ports.
It has a production capacity of 38,000 barrels of oil per day, making it much smaller than refineries in Rosemount and St. Paul Park.
Despite the increased cost estimates for rebuilding, Cenovus had a stellar quarter due to high oil prices. Its profits were more than seven times higher than a year ago, and the company tripled its stock dividend.
Cenovus is Canada's second-largest oil and gas producer.