We're not leaving St. Croix, HOVENSA CEO says
Published: May 23, 2012
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ST. CROIX - A HOVENSA official told members of the St. Croix Hotel and Tourism Association on Tuesday that the company hopes to be here for many years to come.
"HOVENSA is still operating as a company," said Brian Lever, HOVENSA president and chief operating officer. "It's just not operating as a refinery anymore."
Lever provided members of the hotel group, which was conducting its annual meeting, with an update on the refinery shutdown and the move toward operating as an oil terminal.
He said HOVENSA has followed a protocol, taking out all the hydrocarbons from its processing units. Tanks, piping and sewers still have to be cleaned - a process that may take from 18 months to two years, he said.
"I am here to tell you that yes, it will be left safe and clean," Lever said.
HOVENSA is in the process of converting from a refinery to an oil storage terminal.
One of the critical issues right now, Lever said, is reaching a new agreement with the V.I. government. The agreement that is in place right now - the third concession agreement - is for operating a refinery and HOVENSA no longer fits the bill, he said.
HOVENSA and the government have reached an informal interim agreement that HOVENSA is operating under until the end of the year.
However, the parties need to reach a new agreement for HOVENSA to operate during 2013 and beyond, he said.
Until an agreement with the government is in place, planning is difficult, he said, noting that the company is not entering into any long-term contracts until the future is more certain.
"We are in this period of uncertainty, both from a government perspective and from the HOVENSA perspective," Lever said.
HOVENSA hopes to rent out storage tanks for oil products - from crude oil to intermediate and finished products, he said, pointing out different reasons why companies may be interested in storing products there.
HOVENSA has 30 million barrels of storage capacity but intends to start by leasing out only about 10 to 12 million barrels of that storage capacity, he said.
Lever also noted that there has been much public discussion about whether St. Croix will have gasoline going forward.
"I want to put your minds at rest. Yes," he said.
HOVENSA intends to continue operating the truck loading station on St. Croix, where wholesalers buy gasoline and other fuels, he said.
At this point, as part of the interim agreement, HOVENSA is supplying the fuel at the truck rack through the end of the year.
All will be contingent on reaching an agreement with the government, but Lever said HOVENSA would like to continue operating the truck rack past Dec. 31, although the products it sells would have to come from another entity.
As far as employees, HOVENSA currently has about 273 people still working, and about 100 of them will be long-term permanent employees, he said.
Between now and the end of July, a transition team is sorting out details and working to design and put new systems in place, he said.
At the end of July, 146 transition workers will leave, and a smaller group will remain through the end of the year, Lever said.
By the end of the year, he said, the employee count should be about 100, with about 30 additional contractors remaining to do maintenance work at the facility.
However, there may also be work for up to 200 more people cleaning tanks and lines for 18 to 24 months before the refinery is mothballed, Lever said.
HOVENSA officials would like to fill as many of those spots as possible with local workers, he said.
HOVENSA intends to "remain a viable business on St. Croix," he said.
Lever then fielded questions from the audience - questions that ranged from what HOVENSA will be doing with its housing to what it will be doing with its power-generating capacity.
Lever said HOVENSA, which has housing in four estates, has not yet decided what it will do with the homes.
Some of the concrete homes may be used as offices, but most of the trailers are in poor repair and may eventually be dismantled, he said.
HOVENSA is capable of generating 160 megawatts, about three times what St. Croix needs, according to Lever. Right now, HOVENSA is consuming only about 8 megawatts of power, he said.
Officials are considering acquiring a smaller gas turbine that would be fueled by propane to meet HOVENSA's power needs moving forward, he said.
Although there has been talk in the community about the possibility of HOVENSA generating power for the V.I. Water and Power Authority, Lever did not sound hopeful.
He said that the HOVENSA turbines are fueled by oil products - fuel that the company is no longer producing. Lever also pointed out that the HOVENSA turbines are not connected to the grid for the rest of the island.