Ridley Terminals taken to court by Suncor Energy
Shortly after celebrating a record year for tonnage handled, Prince Rupert-based Ridley Terminals was on the defensive after being hit with a lawsuit by Alberta energy giant Suncor about how the facility was handling its petroleum coke product.
According to documents filed in the BC Supreme Court, the catalyst for the suit is how the petroleum coke is delivered and handled during the winter months when freezing is a possibility. Currently Suncor sends approximately 25 rail cars of petroleum coke per day to Ridley Terminals and has an agreement with Ridley Terminals dating back to October 6, 2007 to handle the product. The contract, in which the documents indicate Ridley Terminals agreed to handle any and all volumes of petroleum coke from Suncor, was to expire on June 30, 2011 but on November 25 the company exercised its option to renew the agreement until 2013.
On December 13 Suncor received a letter from Ridley suggesting an anti-freeze agent be used on the petroleum coke to resolve issues about the product being harder to remove due to the “frozen nature” of the coke. Since Suncor has no experience using an anti-freeze product, is not sure how it would be applied and what impact it could have on the characteristics and quality of the coke, they told Ridley Terminals it would take considerable time to determine a system and study the effects and that it would not be implementing the use of anti-freeze in the near future.
On December 27 Ridley Terminals advised that they would no longer accept petroleum coke without an anti-freeze agent after December 30, 2010 a deadline that was later moved to January 5, 2011 – after which Ridley Terminals would refuse rail shipments from Suncor.
On January 7 Suncor filed suit in the Supreme Court of British Columbia saying Ridley Terminals refusal of their product would have “a catastrophic impact” on their operations and the direct losses over a 90-day period would be “in the tens of millions of dollars”. As well, Suncor says any other means of moving petroleum coke from the refinery to another terminal is untested and would require regulatory approval, while Suncor would also suffer damage to their reputation as a result of Ridley Terminals’ action.
On January 14 Justice N.H. Smith agreed with Suncor and told Ridley Terminals they could not refuse any shipment from Suncor because it does not have an anti-freeze agent until January 31, 2011. But that wasn’t the end of the debate.
According to documents filed on January 17, just hours after the ruling Ridley Terminals sent Suncor correspondence indicating it would not accept any shipments from Suncor because it did not have sufficient storage volume. Suncor said the issue of volume was never brought up nor was there any consideration of not accepting shipments because of volume concerns and that nothing in the past indicated there would be shipping volumes.
As a result, they asked the court to order Ridley Terminals to accept all shipments from Suncor until at least February 8. And on January 20 Justice Smith once again agreed with Suncor Energy and granted the extension to February 8.
Look for more on this story as it becomes available.