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Harvest Operations reaches deal to sell oil refinery in Come by Chance, N.L.

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COME BY CHANCE, N.L. - Calgary-based energy company Harvest Operations reached an agreement Friday to sell its oil refinery in Come by Chance N.L., to SilverRange Financial Partners LLC of New York.

Harvest Operations (TSX:HTE.UN) said the sale covers North Atlantic's refining and marketing operations in Newfoundland, including home heating businesses and 53 gas stations.

Kim Urban, a spokeswoman for Harvest Operations, said SilverRange plans to continue operating the refinery, which employs about 500 people.

"(SilverRange) has done their due diligence and they see the potential in the refinery," said Urban in a phone interview from Calgary.

Urban would not reveal the terms of the deal, but said she expects the sale will close later this year.

SilverRange Financial declined an interview request Friday. But in a news release, the company said the refinery, which processes about 115,000 barrels of crude oil per day, gives access to markets along the U.S. Eastern seaboard and within Europe.

The government of Newfoundland and Labrador issued a statement saying it supports the sale because it will support the long-term viability of the operation.

The refinery was started in the 1960s by U.S. entrepreneur John Shaheen with the hope of importing Middle Eastern crude and refining it into fuel for the North American market.

However, it was built with millions of dollars in government money and plagued by financial and operating problems for years.

Ownership later fell to the provincial government before the money-losing project was shut down in 1976, with debts of $500 million owed to creditors, including Ottawa and Newfoundland.

Petro-Canada later bought the refinery but sold it in 1986, a year before it was reopened by another company, Bermuda-based Newfoundland Energy Ltd.

Harvest Operations bought it eight years ago.

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