Friday, August 06, 2010


Shell Canada announced earlier this year that they would be closing their Montréal East oil refinery and converting it into a "distribution terminal". This means a reduction of the workforce from about 800 people to a low of perhaps 25 ie layoffs for about 97% of the workers employed there. Needless to say the workers, represented by Local 121 of the Communications, Energy and Paperworkers Union of Canada (CEP Union) have been fighting this tooth and nail. To date they have achieved a temporary injunction preventing the closure of the plant until it is certain that a buyer cannot be found.

The union is considering various courses of action as the time on this injunction is running low. What seems to be missing is an obvious alternative. Molly will get into this later. For now here's a story from the CBC about the opposition to the refinery closure.
Union vows fight to save Montreal refinery

Shell Canada plans to convert its Montreal East refinery into a distribution terminal after negotiations to sell the 77-year-old facility failed. (Paul Chiasson/Canadian Press)
A boycott, a petition and political pressure are among tactics that union leaders are considering to stop Shell Canada from dismantling its Montreal East oil refinery.

Shell said Monday it will go ahead with plans to convert the refinery into a distribution terminal after negotiations with a potential buyer fell through.

The 77-year-old refinery employs 800 people, while a distribution terminal would require only 25 to 30.

"It's frustrating," union president Jean-Claude Rocheleau said Tuesday. "We just can't lose all those jobs."

Rocheleau said there's enough public support in Quebec for a petition, and another boycott of Shell products is a possibility. The union organized a one-day boycott in June.

"It's easier to do because there are so many gas stations," he said.

Shell and Delek US Holdings, which had offered to buy the refinery, renewed talks last week to see if they could resolve issues that led to a breakdown of negotiations earlier this year. Shell had previously rejected Delek's offer of $420 million.

However, the talks broke off with both companies saying they did not intend to discuss the sale further.

Injunction in place
Rocheleau said he believes Shell doesn't want to sell the refinery and have it continue operating. "We have to convince Shell it's better for them to sell their refinery than keep running a terminal," he said.

The union obtained an injunction in July that prevented Shell from dismantling the refinery while the possibility of a sale remained alive.

"We will continue to comply with the injunction," said Shell spokesman Larry Lalonde, adding it expires around Sept. 10.

In the meantime, the company will continue working on regulatory approval to convert the refinery into a distribution terminal, Lalonde said.

Shell would need the Quebec government's approval to shut down the refinery and Rocheleau said he wants to make sure the union is consulted.

Natural Resources Minister Nathalie Normandeau has to decide if Shell has done everything it can to sell the refinery, he said, adding that environmental regulations also have to be respected if the closure goes ahead.

Denis Lebel, federal minister of state for Canada economic development, said the federal government won't get involved in a business decision between two companies.

Rocheleau also expressed concern that the refinery's 500 unionized employees could be locked out by Shell. The two sides are in contract negotiations regarding layoff procedures and protocol for closure of the refinery.

In a lockout, unionized employees would lose a layoff premium based on the number of years of service, Rocheleau said.

Shell said it will treat workers fairly during the closure. "We recognize that it's a difficult time for them and our intent is to be fair with them," Lalonde said.

Read more:
It appears that Shell has merely been going through the motions of obeying the injunction and searching for a buyer for the plant as the following item from the CEP Union website says. Note also the further clarification of the number of workers compared to the CBC item.
Union to fight Shell conversion of refinery to terminal;

Move would result in loss of almost 500 high-paying jobs, CEP says

Published Postmedia News
By Allison Lampert
MONTREAL - Government regulators will come under intense union pressure to stall Shell Canada Products's plans to convert its east-end Montreal refinery into a terminal, labour leaders say.

The plans for a terminal, which would result in the loss of almost 500 high-paying jobs, are inevitable after negotiations ended with potential buyer Delek US Holdings, Inc., Shell says.

Union leaders say they're asking Quebec to use provincial laws governing environmental protection and oil products to make the conversion more difficult for Shell. For example, Shell cannot demolish its oil refining equipment when it converts to a terminal, which would receive refined oil from both domestic and international markets.

"It's clear that we are going to use these tactics to stop the conversion," said Jean-Claude Rocheleau, president of local 121 of the Communications, Energy and Paperworkers Union of Canada.

The conversion to a terminal will eliminate all but 25 to 30 jobs at the site, which is now staffed by about 500 unionized workers and an additional 250 temporary, full-time employees. The workers, including engineers, welders and technicians, earn about $80,000 a year, on average, Rocheleau said.

"This will make Quebec poorer," he said.

Larry Lalonde, spokesman for Shell, which operates 280 company-owned retail outlets and a wholesale business in Quebec, said any delays to the permit-approval process could result in shortages.

While Shell doesn't need to demolish parts of the plant, it is seeking government approval to modify certain pieces of equipment for the terminal.

"We need to get moving on the conversion," Lalonde said. "Otherwise supply would be tight."

Shell intends to cease production at the refinery in mid-September and would like to have the terminal running by November, he said.

"But this is all pending regulatory approval, of course."

At a time when companies are operating modern, efficient refineries in oil producing regions like Qatar, Lalonde said, it would cost Shell more than $400 million in capital upgrades to properly run the 130,000 barrel-per-day crude processing facility in Montreal. The refinery now processes crude oil imported from Portland, Me.

"This refinery, in particular, is 77 years old," he said. "It is an old facility. It is not commercially viable for Shell to keep running it as is."

Lalonde said Shell had searched unsuccessfully for a buyer for more than a year. While Shell was asking for a sale price of around $150 million to $200 million for the refinery alone, the best offer from Delek would have included the refinery plus the sale of parts of Shell's resale and wholesale businesses, he said.

But Rocheleau dismissed the sales process as a sham. The potential buyer, Delek, was found by a special committee of union and political representatives, not Shell, he said.

"It's clear that what they always wanted to do was to convert the refinery into a terminal," he said.

Of the tactics that the CEP Union has proposed only the idea of a boycott will actually impact Shell directly. Further lobbying would be the least useful as the government, in the absence of any evidence of public pressure would almost inevitably wash its hands of the whole matter, saying that "it has done all that it could" with the previous injunction.

About the only thing likely to give Shell serious pause would be an implied threat that the process of dismantling/refitting (chose one) might be disrupted either by blockade or by an actual occupation of the premises. Nobody should expect the union to actually "threaten" such a thing, but one could hardly accuse them of a violation of the law if they were to simply mention to both their membership and the public the many instances in recent Canadian history where such tactics were successfully used by a variety of workers in a variety of disputes. No need to "advocate" any such thing. Just a little "background information", that's all.

To be honest, however, I personally think that this particular struggle is unlikely to succeed given the age of the plant and the implied costs of upgrading it. Not that the plant couldn't be made viable given enough time and gradual refitting. But, as the above article says, any buyer would pretty well have to be in possession of at least some of Shell's wholesale and retail revenue to finance such upgrading. By the "letter of the law" ie the injunction Shell is under no compulsion to part with that part of their business, and their actions have shown that they most certainly will not.

The problem with this search for a new operator is the same problem that continually reoccurs in many industries. All this is being done in an atmosphere of crisis where a company is threatening shutdowns and massive layoffs. The workers involved in such situations are in a position where their bargaining power is considerably reduced. To my mind there should be a long term approach, rather than coasting through "good times" with an I'm all right Jack attitude and only reacting in times of crisis.

To my mind a long term solution would obviously be a nationwide federation of co-ops involved in the energy sector. Sure there are co-op gas bars across the country. In Québec they are operated under the 'Sonic' brand owned by the Coop fédérée. In the whole of Canada, however, the only co-op refinery is in Regina Saskatchewan. There should be many more. Not that the Regina refinery was the most pleasant neighbour at times. I remember well how the closer you lived to it the fouler the air was. I understand things are a bit different these days. I understand that cooperatives are a provincial responsibility under Canadian law, but I don't see how this could prevent various provincial federations from coordinating their efforts - the very essence of a federation- without being formally linked. I would suggest a mixed producer/consumer co-op model. The present gas outlet co-ops are exclusively consumer owned. I would also suggest that the demonstrated long term success of the co-op model in Canada says that it is a viable alternative to statist solutions such as the late unlamented PetroCan or to simply letting the multinationals run the show in the accustomed way.

That, of course, is a long term prospect. It is, however, an attractive one for many reasons, not to just protect jobs or to reduce the cost to consumers. In the immediate future of the situation in Montréal the idea of a co-op refinery is not as outré as it may seem. Difficult yes, but not impossible. Québec already has a vast cooperative network with large financial resources. It also already has a network of retail co-op outlets. Why not consider this option ?

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