Why the Irvings might be ditching oil

News that Arthur Irving is no longer in a leadership role at Irving Oil could be yet another signal the business is shifting its corporate focus away from the fossil fuel, says a University of New Brunswick business professor.

In June, the company announced it was considering selling the refinery side of its business as part of a strategic review. Company spokesperson Katherine d'Entremont did not respond to a media request from Canada’s National Observer asking about the shift in the company’s structure.

Arthur, who is 93 years old and has been dubbed a "climate villain" by Environmental Defence, has been the sole owner of Irving Oil since his father’s death in 1992 and president since 1972. The company’s website now lists Arthur as “chairman emeritus,” but notes he continues to “maintain a respected advisory role for the board and its activities.” His daughter, Sarah Irving, has been removed from the page. An archived webpage captured by Wayback Machine in June 2023 shows her still listed as executive vice-president.

Rob Moir, an associate professor with the University of New Brunswick's Faculty of Business, attributes the changes to a combination of things. Firstly, Arthur is aging and it’s a natural time for his retirement and secondly, the company is acknowledging the inevitability of the energy transition and the bad business case for continuing to invest in fossil fuels.

“I don't expect that they're thinking of selling the business — the refinery. I think they're announcing, ‘We've effectively sold the refinery’ or ‘We're well on our way to selling the refinery,’” said Moir, who noted the company making the potential of a sale known is especially telling for a business so known for secrecy.

“So I suspect this is the perfect time for shifting the corporate focus.”

There are other suggestions of a shift, explained Moir. Nowadays, solar panels sit atop Irving Gas stations, and EV-charging ports are being installed along with the pumps, which he describes as “green signalling.” The company invested in an electrolyzer last year to produce hydrogen at its refinery. It also announced plans to create a “renewable energy hub at the Irving Oil Whitegate Refinery” in Ireland in partnership with an offshore wind developer.

Sarah being absent from the Irving Oil team page could signal her being the one to lead a new arm of the company focused on other sources of energy, said Moir. The Globe and Mail describes her as “a driving force behind Irving Oil’s energy transition initiatives, which include publishing an annual sustainability report and other advocacy.”

The Irving empire wields immense power in New Brunswick; Irving-owned stores sit at key corners in many towns and cities. In Saint John, about an hour south of Fredericton, the company operates Canada’s largest oil refinery. Throughout the province, hardware stores, trucking, construction companies and more operate under different names as Irving-owned companies. J.D. Irving Limited is the largest private owner of forests and wood products and leases land from the provincial government.

Irving Oil falls under the Irving Group of Companies and is owned by Arthur, who is 436th on Bloomberg’s Billionaires Index with a net worth of over US$5 billion: almost 80,000 times the median household income in the United States.

While the forestry and oil side of the company is currently separated, and has been since Arthur’s father K.C. died, Moir said this could be a chance for them to redefine how they think about business — “if they look at energy as a whole, rather than just oil.” He notes tidal power presents a significant opportunity in Atlantic Canada, as well as wind. Another homegrown chance to marry the forestry and energy side is the potential conversion of the Belledune coal-fired generating station to biomass, a process where waste wood is burned to create electricity.

“There's opportunities, weirdly, at this point for the company to come differently back together,” said Moir.

Federal climate policy

The potential shift for Irving Oil comes with the increasing risk of fossil fuels being bad investments as the energy transition unfolds. Most recently, the International Energy Agency (IEA) found that taking current climate policy into account, global demand for fossil fuels will peak before 2030.

While the IEA also stresses there needs to be more ambitious climate action than what is already occurring to keep global heating within 1.5 C, Moir said the company is likely considering the bad business case for fossil fuels.

“That writing has been on the wall for a while… They're motivated by money. I don't think this is just a 'Oh, we're all green,’” he said.

The Irving Oil refinery is N.B.’s largest greenhouse gas emitter and will be subject to the federal clean fuel regulations. However, the company has pushed back against the legislation so far.

The forthcoming clean fuel standard will require companies that produce and import fuels — like gasoline and diesel — to gradually reduce how much carbon is released during production, processing, transportation and consumption of their products over time. To comply with the clean fuel regulations, an oil refinery could invest in carbon capture technology or blend more ethanol into their fuel, for example.

N.B. Green Party Leader David Coon explained that Irving Oil “lobbied long and hard” against the regulations while refusing to update its oil refinery to make cleaner fuels and that Premier Blaine Higgs, a former Irving Oil executive, struck a deal with the company.

“In the end, Premier Higgs legislated what he called a ‘carbon adjuster’ for Irving Oil, which saw the Energy and Utilities Board add seven cents a litre to gasoline on July 1st giving us the second-highest gasoline prices in the country,” explained Coon in an emailed statement.

“The unique thing about Higgs’ gas tax is the revenue goes to Irving Oil to pay them to comply with the clean fuel regulations.”