Debt market turmoil may slow Canadian refinery

(In U.S. dollars unless noted.)

CALGARY, Alberta, March 14 (Reuters) - Newfoundland and Labrador Refining Corp, in the race to build North America's first new refinery in a generation, said on Friday it has not yet been able to finance the $4.6 billion project because of the turmoil in the debt market.

Brian Dalton, chief executive of Altius Minerals Corp (ALS.TO: Quote, Profile, Research), one of the project's backers and the project's director, said the debt market has dried up and there have been no takers for the project's financing.

"It's not pricing. There are just no bids for anything," Dalton said. "It's not fun at all... The economics are great, the project is configured the way we want it to be, the commercial partners love it, but timing is everything."

Dalton said the project's backers are still behind it. The refinery is still slated to be built by the end of 2011 on Newfoundland's Placentia Bay.

The company is looking to secure financing but warned it may slow the pace of development while it hunts for capital.

The proposed Southern Head refinery is one of two new refineries planned for Canada's Atlantic Coast, along with closely held Irving Oil Corp's proposed 300,000 bpd facility in Saint John, New Brunswick.

Newfoundland and Labrador Refining said that there have been some changes to its plans for the refinery. It will now incorporate equipment that will let it increase production of so-called "middle distillates" such as diesel and jet fuel, while lowering gasoline output.

Those changes will add a few months of construction time and increase costs, though Dalton declined to quantify how much the budget would increase.

Newfoundland and Labrador Refining comprises base metal exploration firm Altius, Dermot Desmond, founder of Dublin-based International Investment and Underwriting, Scottish financier Harry Dobson, and Stephen Posford, the former head of European operations for investment bank Salomon Brothers. (Reporting by Scott Haggett; Editing by Peter Galloway)