DULUTH — The $750 million rebuild of the fire-damaged oil refinery in Superior, Wis., will continue as owner Husky Energy completes a merger with Cenovus Energy early next year, a spokeswoman confirmed Tuesday.
The $2.9 billion deal announced this weekend is expected to result in up to 2,150 layoffs, mostly at company headquarters in Calgary, Alberta, according to Cenovus, which was formed 11 years ago and primarily focuses on oil sands extraction in Alberta.
The combined company will be known as Cenovus Energy.
"We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead," Cenovus CEO Alex Pourbaix said in a statement. The combined company intends to "sustain production levels and downstream operations."
"Bringing our talented people and complementary assets together will enable us to deliver the full potential of this resilient new company," said Husky CEO Rob Peabody.
Share prices for both Husky and Cenovus are down more than 60% since the beginning of the year due to the pandemic's impact on the global oil industry.
Husky bought the 69-year-old Superior refinery from Calumet for $492 million in 2017. In April 2018 a hole in a valve 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.
Reconstruction of the facility includes more than $150 million worth of new safety measures, though the company opted to continue using hydrogen fluoride, a highly caustic chemical that increases gasoline octane. The potential release of hydrogen fluoride was the basis for a near-citywide evacuation in Superior as the refinery burned.
A refinery fire in Philadelphia last year renewed attention on the chemical, which the Duluth City Council has asked the EPA to review — parts of Duluth could be affected by a worst-case scenario hydrogen fluoride release in Superior.
Cenovus already had 50% ownership of two U.S. refineries — in Texas and Illinois — that had a combined average 443,000-barrel-per-day capacity last year. In addition to the Superior refinery, which processes light and heavy oil into asphalt, gasoline, diesel and heavy fuel oils, Husky owns a refinery in Lima, Ohio.
Reconstruction in Superior employs about 150 people and was halted this spring in the wake of the pandemic but started ramping back up in July. The goal is to have the refinery, which employs about 200 people during normal operations, back online in 2022.