SAINT JOHN, New Brunswick (AP) – Irving Oil is planning to build a second refinery in Saint John and has been acquiring large amounts of land for the facility, a move that could bolster fuel supplies in neighboring Maine.

Officials, speaking on the condition of anonymity, told The Canadian Press on Wednesday that plans for the new facility will be formally announced today.

The first Irving refinery in Saint John is the largest in Canada, and is also the country’s largest exporter of gasoline. Irving is also a major supplier to Maine, where it is one of the top gasoline and diesel retailers and sells fuel on the wholesale market to other distributors.

“They’re a very big force. In northern and eastern Maine, we think that they supply the majority of the market, but in southern Maine they’re supplying a smaller percentage,” said Beth Nagusky, director of the Maine Office of Energy Independence and Security.

Nagusky offered no specifics on the potential impact of a new Irving refinery but suggested that it could be good news for Maine consumers.

“In general, whenever you increase supply, the effect would be to suppress price,” she said. “If the laws of economics are working correctly, it would have a depressing effect on prices.”

While the closest U.S. refineries are in New Jersey, Irving’s Saint John refinery is 70 miles from the Maine border.

Residents of the Redhead neighborhood, near a proposed liquid natural gas facility, say Irving officials approached them four to five months ago with offers to buy property.

An Irving spokeswoman confirmed that the company has purchased land in the area, but didn’t say what the company intends to do with it.

CBC radio reported that two government officials has told its reporter that the new refinery will process 300,000 barrels of oil a day and employ about 1,000 people full-time.

A spokeswoman for Irving Oil Ltd. wouldn’t confirm the report.

, but did say her firm is “always looking for opportunities to grow the community through the energy sector.”

“We’ve stated before that the refinery upgrade project would be completed,” said Jennifer Parker.

Parker also noted the proposed liquid natural gas terminal near the refinery – which would provide a surge in supply of natural gas and liquid byproducts – is “a foundational investment that will make future energy investments possible.”

Irving Oil and Repsol, a Spanish-based energy firm, are planning to build an LNG receiving terminal in the area. It is expected to be on line by 2009 with 1 billion cubic feet per day.

“We certainly hope as energy projects are built in our region, they’re built in Saint John, so our community can realize the benefits,” said Parker.

In September, the company announced it would invest $35 million in scheduled maintenance on four major processing units at the Saint John refinery.

The Irving family has steadily invested in the 46-year-old refinery since a $1-billion upgrade was completed in 2000.

In 2003, for example, Irving invested $100 million to enable the production of ultra-low sulphur diesel, a new environmentally friendly fuel.

Nagusky said Irving has been a key supplier of some of the cleaner fuels sold in Maine.

She said demand for ultra-low sulphur diesel is expected to increase Oct. 15, when it must account for 80 percent of all diesel fuel sold in the United States. That figure is scheduled to increase to 100 percent next year.

“This could be what’s driving the expansion,” Nagusky said.

The refinery opened on July 20, 1960, with an initial capacity of 40,000 barrels per day. Today, the refinery has reached production rates in excess of 300,000 barrels per day.

AP-ES-10-04-06 1437EDT

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