Playing the Irving Oil Guessing Game

Written by Lisa Hrabluk

Best-selling author. Award-winning journalist. Purpose-led entrepreneur. Find me hanging out where culture, people and ideas collide.

November 10, 2023

It’s potentially the largest transfer of wealth in Atlantic Canada – and no one’s talking about it

The day the Globe and Mail broke the news that there were no more Irvings atop Irving Oil, a friend sent me a D.M.: “I’m hearing the French have bought it. You?”

Yes, as a matter of fact, I had heard that rumour way back at the beginning of the summer, shortly after 93-year-old Arthur Irving, his 30-something-year-old daughter Sarah and company CEO Ian Whitcomb announced Irving Oil was undertaking a strategic review that might include a whole or partial sale of the famously private New Brunswick energy company.

Could French multinational TotalEnergies SE be interested?

Maybe, maybe not. It’s all one big guessing game when it comes to public discourse about New Brunswick’s famously private family and their business interests.

Started 99 years ago by K.C. Irving, the eponymous Irving Oil is owned, at least for now, by his middle son Arthur, Canada’s 9th wealthiest person according to Forbes’ Real Time Billionaire List with a net worth of $5.8B, just ahead of Spotify co-founder Tobias Lütke ($5.7B), and older brother James ‘ J.K.’ Irving ($5.5B).

The family’s three business empires loom large in the economy of New Brunswick but are relegated to regional curiosities in the national conversation.

Too big to go unnoticed in New Brunswick, too small for the rest of Canada to care.

Imagine if no one talked, researched, or opined on the trajectory of the oil sands and its impact on Alberta’s future.

Ridiculous, non? Not if you live in New Brunswick.

The possible sale of Irving Oil could be one of the largest transfers of wealth in Atlantic Canada.

To date, it has elicited two corporate announcements, a couple of local news stories, no interviews and a little bit of street gossip in Saint John.

That’s why IOL’s strategic review announcement in June was taken as a signal that it’s for sale. When a company is famous for saying nothing, a seven-sentence statement outlining “a series of options,” including a new ownership structure, a full or partial sale or a change in the portfolio of assets, will be viewed as portentous.

The twin exits of Arthur as executive chairman and Sarah as executive vice president in early October further fueled the belief that change is on the horizon. Executives of companies about to be acquired often resign to clear the path for new leadership.

Reporting on Irving Oil has always been difficult. The corporation never releases financial data or any other information that might hint at financial results, market reach or future direction.

To understand the outsized role Irving Oil plays in the New Brunswick economy, Canadian trade statistics, which track imports and exports by product, are a good place to start.

In 2022, New Brunswick had total exports of $18.8 billion; petroleum refineries, of which there is only one, accounted for $11.8 billion of that total.

Just over 64 percent of all provincial exports came from a single location: Irving Oil’s Saint John refinery.

Only Alberta accounts for a higher percentage of provincial exports from a single source; in 2022, 72 percent of Alberta’s exports ($148 billion) came from the oil sands, albeit not from a single company.

The United States is the primary destination for both provinces’ oil and gas products.

While Alberta ships west, New Brunswick ships east. Of the $11.8 billion Irving Oil exported in 2022, $11.7 billion was exported to Eastern Seaboard states, half to Massachusetts and Maine.

The U.S. figures prominently on the petroleum imports side of the ledger, too. Since 2020, it has been New Brunswick’s top crude importer, followed by Saudi Arabia and Nigeria.

Being the preferred provider for Boston’s fuel has long been Irving Oil’s calling card. Now, it might be a significant sales feature for corporate buyers on the watch for opportunities to consolidate American operations via a merger or acquisition, particularly if said buyer wants greater access to the Boston, New York, and Philadelphia markets.

If a buyer also happens to ship crude from Saudi Arabia or Nigeria, Irving Oil’s refineries and chains of gas stations in Ireland and eastern North America, located just a scootch north via Atlantic Ocean shipping routes, could increase its curbside appeal.

That potential scenario could narrow the possible list of suitors to a handful of large public corporations such as supermajors Exxon Mobil, Chevron, Shell, ConocoPhillips and TotalEnergies.

Coincidentally, earlier this year, TotalEnergies exited Alberta’s oil sands, selling its 50 percent interest in one oil sands project to partner ConocoPhillips for $4 billion, and agreed to sell its remaining Western Canadian oil sands operations to Suncor Energy for $1.5 billion, leaving its lubricants business in Montreal its primary Canadian operation.

Would TotalEnergies exit the West to re-emerge in the East?

I don’t know, but I am curious why its name is making the rounds in some circles in Saint John.

What I am certain of is the twin resignations of Arthur and Sarah Irving from the company that bears their name is the clearest signal that something significant is about to happen.

Irving Oil’s media statement may say the company continues to explore its options, but the actions at the top suggest whatever is happening in the executive suites has moved beyond the ‘considering all possibilities’ stage.

Power is shifting in Atlantic Canada.

What that means for the trajectory of regional energy markets and its impact on New Brunswick’s future remains anyone’s guess.

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