EPA Raises the Bar and Oil Refinery Closes in US Virgin Islands

Russ Steele

This story came in over the e-mail transom from CBS Money Watch:

ST. CROIX, U.S. Virgin Islands — The giant Hovensa oil refinery that has dominated the economy and part of the landscape of the island of St. Croix for decades will cease operations next month, the operator said Wednesday.

Industry analysts said the closure is unlikely to have a major effect on the global oil market, but Gov. John de Jongh described the announcement as “a complete body blow” for the U.S. territory. He said Hovensa generated a minimum of $60 million a year in revenue for the government, which already faces a budget crisis.

“Given what we’re going through right now, this is the last bit of news that I wanted to hear,” he said in a teleconference with reporters.

The refinery, the largest private employer in the U.S. Virgin Islands and once one of the largest refiners in the Western Hemisphere, will be converted to an oil storage terminal, said Brian K. Lever, president and chief operating officer of Hovensa LLC.

Why is the plant closing?  Competition from more modern refineries in Asia?  On the other hand, it may have become non-competitive when the EPA got involved.

In January, Hovensa entered into a consent decree with the U.S. Environmental Protection Agency and Justice Department in which the company agreed to invest $700 million on pollution controls after a series of chemical releases affected people living downwind from the refinery. Hovensa also agreed to pay a $5.4 million penalty for violating the Clean Air Act.

With the additional modification costs and fines, it was no longer economical to operate the refinery and the decision was made to close it.  This will have a huge impact on the local economy.  The refinery employs about 1,200 people in St. Croix and has approximately 950 contractors.  Only about 100 people, including contractors, will work at the oil storage terminal.  More jobs lost due to an overactive EPA dedicated to the elimination of fossil fuel energy in the United States. I hope that U.S. Virgin Island voters remember who took their jobs in November.

H/T to a regular reader for this tip.

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

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