Refinery in Superior, Wis., restarts 5 years after explosion

DULUTH — The Superior, Wis., oil refinery, site of an explosion that shook the city five years ago this week, has restarted operations.

New owner Cenovus Energy said in an earnings call Wednesday the refinery was already producing about 24,000 barrels a day with crude oil introduced in March, and will ramp up to full production of nearly 50,000 barrels daily this quarter.

Earlier this week, Cenovus shared new safety measures it will use as it produces asphalt and gasoline products.

"Every step of the way we are looking to ensure a safe, responsible and reliable startup of the facility," said Doreen Cole, senior vice president of downstream manufacturing for Calgary, Alberta-based Cenovus.

At the time of the explosion, the refinery, owned then by Husky Energy, was shutting down its fluid catalytic cracking unit for planned maintenance. The unit is a common piece of equipment at oil refineries used to refine crude oil into higher octane fuels.

A worn valve inside the unit allowed air to mix with hydrocarbons, leading to the explosion of two outdated vessels, spraying metal fragments up to 1,200 feet and puncturing a nearby asphalt storage tank. About 17,000 barrels of hot asphalt spilled and ignited, causing multiple fires.

Although it did not happen, the release of highly toxic hydrogen fluoride, also known as hydrofluoric acid, was a potential danger, with tanks full of the chemical stored near enough to the explosion to have also been punctured by debris.

In a final report, the U.S. Chemical Safety and Hazard Investigation Board said the accident — which caused $550 million in damage and injured nearly 40 workers — was avoidable. The board laid out several safety recommendations for the new plant, which Cenovus said it will follow.

The new hydrogen fluoride unit was built with several upgrades meant to prevent future problems, Cole said Tuesday. Among them are a rapid acid transfer system equipped to move the chemical within minutes to a secure handling tank; tanks built to change color in the event of a leak, along with other leak detectors, and remote control water cannons built to address hydrogen fluoride vapors.

The unit will also be continuously monitored. Other safety measures include new classroom and field trainings for employees and improved safeguards in the fluid catalytic cracking unit.

The cost to rebuild the refinery grew from an initial estimate of $400 million to $1.2 billion. Cole said that number may be revised later in the year. It took five years to complete because of the sheer scope of the rebuild, with some units needing full reconstruction. The pandemic also slowed efforts, said Cole, noting the restart's economic impact would be "substantial."

About 350 employees and contractors will earn $30 million annually, she said, and $48 million each year will be spent on contractors and vendors.

Cole said the Superior refinery, one of three that the company fully owns and operates in the United States, was a "key contributor" to its portfolio.

Cenovus also owns a refinery near Toledo, Ohio, where an explosion in 2022 killed two workers. At the time, it was only partial owner of the refinery, operated then by BP.

In the first three months of the year Cenovus earned a $466 million profit on $10.8 billion in sales. Profits fell 61% compared with the first quarter of 2022, and revenue dropped 22%.

Scotiabank analysts said this month "the restart of the Superior and Toledo refineries is having a greater impact on ... cash flows than expected. Margins at these refineries will be weaker than usual as they are restarted and optimized."

However, in its earnings preview this month, J.P. Morgan analysts said: "The upcoming restarts of both Toledo and Superior should provide an incremental tailwind to the downstream business that the market may not be giving credit for."

The Superior refinery expects to begin selling product by the end of June.