Husky Energy: Fires Caused $40M In Expenses, $20M In Damages

Husky Energy incurred more than $40 million in expenses and $20 million worth of equipment damages in U.S. dollars related to a series of explosions and fires at its Superior oil refinery in April. Company leaders said it may take up to two years before the facility resumes normal operations. The announcement was made during a conference call with investors on Thursday as part of its second quarter earnings report.

Husky’s chief operating officer Rob Symonds told investors the company plans to use insurance proceeds to rebuild the refinery.

“And while we have yet to establish a timeline for a return to normal operations, today, we believe it will be at least 18 months,” said Symonds. “While the incident at Superior was a serious setback, the refinery remains a good fit with our overall strategy.”

Superior Mayor Jim Paine said the long recovery shouldn’t hurt employment there. He said the refinery is a significant job provider in the city.

“In terms of workers, this refinery is at full employment. This is a significant job. It takes a significant amount of workers,” he said. “In fact, the refinery manager tells me they’re actually employing more people than during normal operation.”

The refinery typically employs 181 workers during normal operation. Husky Energy spokeswoman Kim Guttormson said it’s unclear how much it will cost the company to rebuild. However, she noted the process would likely include units that would need be ordered, built and transported to the site.

“As we don’t have a plan finalized yet, we don’t have a cost estimate or an accurate staffing prediction,” said Guttormson in an email. “However, we do not plan any layoffs as we go through the rebuild process — we will need all hands on deck and will need to bring in a sizable outside workforce.”

Guttormson said the new design would also factor into the company’s decision of whether to continue or cease use of hydrogen fluoride at the refinery. Mayor Paine said again Thursday that he would like to see the company transition to a chemical that poses less risk to the community. Both Paine and Duluth Mayor Emily Larson called on the company to end its use in May.

If released, the chemical can cause a toxic gas cloud that could pose devastating health impacts for area residents. Husky has said safety measures in place at the refinery cooled the tank and prevented any release.

Husky Energy CEO Rob Peabody told investors the company is committed to safety and conducting an outside review of its safety processes and culture. He said other steps to reinforce safety include bringing management compensation more closely in line with safety performance and hiring a senior executive to oversee safety.

Superior’s mayor said it’s important the company take an honest look at what happened and implement any safety recommendations that may be made by federal agencies investigating the incident. Paine noted the city has an innovative partnership with Husky and other energy companies that coordinate emergency response. He’d like to see that strengthened.

“We need to continue to build those relationships, build our resources and our training opportunities among those private companies and the city of Superior and even the surrounding area so that we’re capable of responding to an emergency,” he said. “A disaster response like this is first and foremost about prevention, but in the event that there is another emergency, we need to be able to respond even more effectively than we did on April 26.”

Paine said he’d like to see that training extend to volunteer fire departments across northern Wisconsin.

Investigations of the incident are still ongoing.