(Adds further details, background) NEW YORK, July 26 (Reuters) - Private equity firm Cresta Fund Management has agreed to buy a controlling stake in idled Canadian 135,000-barrel-per-day (bpd) Come-by-Chance refinery, a fund representative said on Monday, with the aim of converting it to renewable fuels production. The refinery, owned by North Atlantic Refining Ltd (NARL), has been idled for more than a year. Several refiners since then have announced plans to convert their operations to renewable fuels production to remain viable as both Canada and the United States try to reduce carbon emissions. Canada’s Clean Fuel Standard (CFS) will require carbon-intensity reduction targets set for fuels such as gasoline, diesel and kerosene, starting in 2022 and is projected to increase renewable fuel demand. The first phase of the conversion would change Come-by-Chance refinery to a facility capable of initially producing 14,000 barrels of sustainable aviation fuel and renewable diesel daily by about mid-2022, said Chris Rozzell, Cresta’s managing partner said in an email. A second phase will seek to double the capacity of the refinery and incorporate the ability to produce green hydrogen - where renewable energy such as wind or solar powers the extraction of hydrogen - Rozzell said. Refinery employees were notified of the agreement on Monday afternoon, the fund said. The deal is expected to close in the third quarter and the fund declined to disclose the value of the transaction. NARL did not immediately respond to a request for comment. Come-by-Chance has been looking for a new owner since Irving Oil backed away from a purchase and share agreement last year. (Reporting by Devika Krishna Kumar; Editing by Sandra Maler) Our Standards: The Thomson Reuters Trust Principles.