Company to explore feasibility of second refinery for the province

Danny Williams, Premier of Newfoundland and Labrador, and Natural Resources Minister Ed Byrne, announced today that a private company, Newfoundland and Labrador Refining Corporation, has begun a feasibility study for establishing a new oil refinery in the province in the upper Placentia Bay area.

"We are very excited with this feasibility study which has tremendous economic implications for the province," said Premier Williams. "We committed in our Blueprint to pursue opportunities to expand the refining capacity in the province and, indeed, our government has undertaken a study to determine the potential in this regard. Newfoundland and Labrador Refining Corporation�s announcement to commence a feasibility study signals their confidence in the potential for further capacity and I look forward to the results."

The feasibility study is timely because a shortage of oil refining capacity worldwide has created strong market demand. The study area has been selected on the basis of its strategic location and the efforts of the province of Newfoundland and Labrador in encouraging and promoting the building of new oil refining capacity in the province.

Newfoundland and Labrador Refining Corporation cites Placentia Bay as a strategic location and a natural choice as the basis for the feasibility study considering its skilled workforce, established ice-free, deepwater shipping lanes and proximity to both potential oil supplies and large markets for refined products along the east coast of North America. The provincial government and Newfoundland and Labrador Refining Corporation have entered into an agreement during the study period which enables the company to begin site analysis and to conduct a feasibility study.

"We know there is tremendous potential to expand and develop many areas of our resource industries, including the oil and gas sector. Worldwide, oil refining capacity needs expansion, and Newfoundland and Labrador is a prime location for a new refinery. With our province�s oil and gas expertise and growing industry, expanding our oil refining capabilities will further enhance and strengthen the sector," said Minister Byrne.

The three-stage feasibility study will include analysis of the appropriate slate of refined products, potential supplies of crude oil, refinery layout and its engineering requirements. It is expected to take approximately 42 weeks to complete and will be funded entirely by Newfoundland and Labrador Refining Ltd. at an estimated cost of US $7.0 million. The optimal size of a proposed refinery will be determined as part of the feasibility study, but the initial concept envisions capacity of approximately 300,000 barrels per day.

Newfoundland and Labrador Refining Corporation, in explaining that working with local communities will be a key part of the study and any subsequent work stated, "The guidance and experience of neighbouring communities will be a critical part of the feasibility study, particularly with regards to specific site selection and environmental design. We have begun initial discussions with the mayors and councils of the neighbouring communities. Additional meetings are being arranged over the coming weeks and opportunities for communication and discussion will be ongoing throughout the study period."

Newfoundland and Labrador Refining Corporation is a provincially-based company with founding investors that include local natural resources company Altius Resources Inc. and European entrepreneurs with proven track records in both equity and debt finance arrangements for development projects. NorCan Consulting Limited will manage the feasibility study. It is a Newfoundland and Labrador based company with extensive working knowledge of the oil and gas industry in the province. NorCan also has diverse international project management experience in the construction and expansion of oil production and refining facilities.

Additional information about the feasibility study and Newfoundland and Labrador Refining Corporation, including its founding shareholders, may be accessed at www.nlrefining.com

Media contact:

Elizabeth Matthews, Office of the Premier, (709) 729-3960, 690-5500, elizabethmatthews@gov.nl.ca

Carmel Turpin, Natural Resources, (709) 729-5282, 685-4624

Brian Dalton, Director, Newfoundland and Labrador Refining Corporation, 1-877-576-3442

Roland Butler, Community Inquiries, Newfoundland and Labrador Refining Corporation, 1-877-576-2209

NOTE TO EDITORS: Premier Williams will be available to respond to media inquiries regarding this announcement at 1:00 p.m. this afternoon in front of the House of Assembly.

2006 02 09                                 11:05 a.m.