The massive project to rebuild the Superior refinery following the explosion in 2018 is expected to be finished sometime in early 2023. But the costs involved will be a lot more - much more - than originally forecasted.

Estimated cost projections for the start to finish rebuild are now clocking in at $1.2 billion and there's almost a full year of work left to be done.  That dollar amount is now triple what contractors had originally though when  the project started. Originally, Husky Energy (the owners at the time) had looked at $400 million as a budget amount.

Calgary-based Cenovus Energy is the current owner of the explosion and fire-ravaged facility, following a transaction last year from original owner Huskey Energy.  Cenovus inherited the rebuild project - and associated costs - with the deal in order to have an operable facility.

Explosion Reported At Husky Oil Refinery In Superior, Wisconsin
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$1.2 billion is a far cry from $400 million under any stretch of the imagination.  So why are the costs versus projection numbers so far off?

Many reasons.  And the global pandemic isn't one-hundred-percent to blame.

According to an article in the Superior Telegram [paywall], the cause is multi-fold. Alex Poubaix, President and CEO of Cenovus Energy explains:

"[The added costs are] due to inflationary impacts on labor and supply chain as well as increased costs stemming from COVID-19 impacts."

However, no matter what the costs are, and no matter how much overage there is, having a rebuilt and on-line refinery in Superior is a priority for the company.  Pourbaix adds:

"With a nameplate capacity of 49,000 barrels per day, Superior will be an important addition to our heavy oil value chain as the first stop in the Enbridge mainline."

A rebuilt and on-line refinery is also central to bringing value to the companies purchase of the facility last year.  (i.e. the purchase came with an "expected" value of an online refinery as part of the value; if the plant doesn't come back online, that value to the note would be much less)

The Superior refinery now owned by Cenovus has "been inoperable since the April 26, 2018 explosion and fire that injured 36 people and led to the evacuation of much of the city, largely fueled by the fear of a potential release of hydrogen fluoride.  None of the facility's supply of the toxic gas was found to have escaped".

Explosion Reported At Husky Oil Refinery In Superior, Wisconsin
Getty Images

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