LIMA, Ohio -An oil refinery here is getting a new owner from Canada -and possibly a major expansion.

Husky Energy Inc., Calgary, Alberta, has agreed to pay $1.9 billion for a refinery owned by Texas-based Valero Energy Corp., the two firms said yesterday.

The plant has 400 employees and is capable of processing 165,000 barrels of oil daily for gasoline and diesel fuel.

As part of the transaction, the buyer pledged to retain all of the firm's current employees, said Bill Day, a spokesman for Valero in San Antonio.

"They are active in the communities where they have operations," he said. "We would not have sold the refinery to a company that was not going to be a good neighbor."

In a written statement, Husky officials said they will study "reconfiguring and expanding" the refinery to allow it to process lower quality, less expensive crude oil and so-called oil sands.

Valero had studied a similar move but decided the estimated $2 billion cost was too high.

Graham White, a spokesman for the buyer, declined to discuss the size of the potential investment in upgrades, but said that the current owner's projection for converting the plant is not out of line.

He wouldn't say if a conversion would lead to additional hiring, but added:

"With an expansion of that size, it logically follows."

Before any changes, however, the buyer would conduct significant studies. "Our immediate plan is to keep the refinery running as usual," Mr. White added.

The sale is subject to approval of U.S. and Canadian regulators. The two firms hope to finalize the sale by June 30.

Husky, listed on the Toronto Stock Exchange, is involved in oil exploration, processing, and marketing, although its retail network is limited to Canada.

Its plans are to sell oil produced in Lima in the United States, however.

Valero is the nation's largest U.S. refiner.

It acquired the Lima refinery as part of its purchase of Premcor Inc. in 2005. The Lima facility was formerly owned by BP PLC.

- Gary T. Pakulski

First Published May 3, 2007, 9:43 a.m.