HOVENSA rack closure could jeopardize St. Croix's air traffic
Published: August 22, 2013
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As the 30th Legislature on Tuesday discussed the possibility of a lawsuit against HOVENSA, a representative from the local aviation sector warned that HOVENSA's planned shutdown of its truck loading rack could jeopardize St. Croix's continued air traffic.
Sam Black, general manager of Bohlke International Airways, said in an interview that unlike St. Thomas, St. Croix has virtually no storage for jet fuel outside of HOVENSA.
Black and Anthony Weeks, the managing director of the St. Croix Economic Development Initiative, went to St. Thomas in hopes of testifying at Tuesday's special legislative session, they said.
The two men were not allowed to testify because it was a special session, where the agenda includes only those matters that the governor called on senators to consider, they said.
However, they did have a private meeting with the Senate majority caucus.
"We felt that we needed the senators to understand that they've got to be mindful that what will be caught up in the middle is the different sectors of the economy," Weeks said of the possibility of litigation with HOVENSA. "We needed to be able to get that message to the senators, that litigation will literally cripple the aviation industry."
In a statement that Black had prepared to give as testimony, he said that if "HOVENSA's threat" to close its loading rack for dispensing jet, diesel and automobile fuel comes to reality, this would "have a snowballing catastrophic effect" on the local economy.
Black listed these issues:
- St. Croix has virtually no storage outside of HOVENSA for jet fuel.
- St. Thomas has fuel storage of about 2 million gallons between two private companies. They have permanent lines in the ocean to receive product directly from a barge into their tanks, according to Black.
St. Croix does not have this option - although it used to. That facility in Betty's Hope was destroyed in Hurricane Hugo, he said.
- About 97 percent of the aircraft that fly into Rohlsen Airport on St, Croix - including commercial aircraft operating scheduled service to the island, along with military and corporate aircraft - require jet fuel, he said.
However, storage capacity for jet fuel at Rohlsen right now is only about 110,000 to 115,000 gallons, which Black described as "only enough to sometimes get us through a busy weekend."
Bohlke has a particularly large stake in jet fuel remaining easily available at the truck loading rack, as the majority of its business is loading fuel onto planes at Rohlsen Airport.
However, Black said that is not the only reason he is sounding the alarm.
"This is far beyond a Bohlke issue," he said. "It's an airport issue. It's a St. Croix issue. It's a territory issue."
Without HOVENSA's loading rack and storage capabilities, the only way to get enough jet fuel delivered to St. Croix in a timely fashion to handle the air traffic would be to bring it in 6,200-gallon tanks from Puerto Rico or the U.S. mainland, according to Black.
"We would need a minimum of 40 tanks in season continually rotating," he said. "This operation creates major logistical and environmental challenges and concerns. Our estimate is this operation would increase jet fuel cost in St. Croix approximately 40 percent."
Black says he doesn't think the market can handle that.
"It will not work, because it's cost-prohibitive and will price our product out of what our niche market is willing to pay," he said.
Rohlsen's long runway and the island's relatively inexpensive jet fuel have helped make the island a "niche market" for aviation, he said.
HOVENSA's lawyer sent a letter last week to Gov. John deJongh Jr. - which was part of an exchange following the 30th Legislature's Aug. 7 decision to reject a proposed new agreement between HOVENSA and the government - saying HOVENSA plans to shut down its fuel loading rack once its current inventories of fuel are finished. For several days, the company would not discuss when that might happen.
However, on Monday, HOVENSA released a statement saying that - assuming the same sales volumes as experienced in previous months - it has enough product to continue wholesale sales at the loading rack until Oct. 31 for regular gasoline and until Dec. 31 for premium gasoline, ultra-low sulfur diesel fuel and jet fuel.
If HOVENSA follows through with that plan, it is not clear how St. Croix's fuel supply and storage would be handled.
Black and Weeks urged the government to go back into negotiations - or into mediation - with HOVENSA.
Having a well-functioning airport on the island is vital to all sectors of the economy, Black said.
Bohlke does not have the resources to build its own fuel off-loading and storage facility, he said. That, combined with the uncertainty about how things would play out between the government and HOVENSA have made it difficult to know how to plan, he said.
Bohlke officials have talked with government officials about the jet fuel issue before, after HOVENSA's January 2012 announcement it would cease refining operations, according to Black.
"The assumption all along was that the government knew there were not options for high volume Jet A storage outside of HOVENSA," he said. "We were incorrect in making that assumption. My mission yesterday was to educate the government and the senators."
Jet A is a type of aviation fuel.
Black said that some senators did not seem aware of the jet fuel issue before he spoke with them.
He hopes the executive branch heads back into negotiations, he said.
"I would say that this is a large enough issue," he said. "It has the potential to make such a significant impact that that alone should be enough inspiration to go back to the table, maybe make another amendment, write a different bill - present something different specifically addressing this issue that can be voted on."
- Contact Joy Blackburn at 714-9145 or email firstname.lastname@example.org.