Christensen asks feds to include V.I. in report on U.S. oil refining

ST. CROIX - In the wake of HOVENSA's announcement that it would shut down its refinery, V.I. Delegate to Congress Donna Christensen teamed up with Rep. Henry Waxman (D-Calif.) to ask the U.S. Energy Information Administration to include the Virgin Islands in an upcoming report it is preparing about the reduced domestic refining capacity.

"To better understand the issues associated with the HOVENSA oil refinery closure, we ask that you include the U.S. Virgin Islands in the EIA's forthcoming analysis regarding the reduction of refining activity and petroleum markets," read the letter signed by Waxman and Christensen to Howard Gruenspecht, acting administrator of the Energy Information Administration.

Waxman is a ranking member in the U.S. House Committee on Energy and Commerce.

After oil refineries in Pennsylvania were closed in October and November, the committee petitioned the Energy Information Administration to produce a report about the domestic refining industry and the oil markets, Christensen said.

"My primary interest is to try to get a hearing and make sure this is something that Congress knows about," she said. "I thought I could get one because we are not the only community affected."

The letter requests that the Energy Information Administration, which tracks and produces reports with information about domestic and global energy markets, study the effects the territory might feel economically and how oil supply and pricing may change. In addition, it notes that much of the oil supplied to the East Coast and Gulf Coast regions of the United States receive a great deal of their oil from HOVENSA.

"I expect it to be something on the impact on our energy costs and gasoline costs at home, but also it's going to investigate the impact on the United States," she said.

The report is expected to be released sometime in February, Christensen said.

HOVENSA was one of the largest refineries operating in the Unites States, with a production capacity of 525,000 barrels per day until a year ago when it announced the closure of nine poorly performing units in the western end of the refinery. The closure of the units reduced HOVENSA's production capacity to 350,000 barrels per day - a reduction of nearly 30 percent.

At the time, HOVENSA said it was "simplifying our operation by eliminating some older, smaller process units" and that the results would be "improved efficiency, reliability and competitiveness."

Since 2007, most oil refineries in the Unites States and Europe have suffered from reduced profit margins as crude oil rose dramatically, experts have said. As a result, there have been many closures during the last couple of years.

HOVENSA cited $1.3 billion in losses during the last three years. The combination of reduced profit margins, reduced demand for refined products and the rise of new, more efficient refineries in developing areas with fewer regulations have all contributed to the trend, experts said.

"Every company I know of is bailing out of refining," said Fadel Gheit, senior oil and gas analyst for Oppenheimer and Co. "The companies that are holding on to refining are companies that have nothing else but refining."

- Contact Daniel Shea at 714-9127 or email dshea@dailynews.vi.

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