At VIFreepBreaking NewsBusiness NewsEnvironmental NewsGovernment House NewsSt. Croix NewsV.I. Legislature

DELAY OVER? Senate Will Vote Up Or Down on HOVENSA Sale On Tuesday

Neville James

STALLING TACTICIAN: Neville James

CHARLOTTE AMALIE – The 31st Legislature will vote on the sale of HOVENSA oil terminal assets to Limetree Bay, an affiliate of ArcLight Capital, on Tuesday Dec. 29, a spokeswoman at Government House said late Wednesday.

The Senate will have to weigh the benefits of Limetree Bay’s deal and decide whether auction winner ArcLight Capital Partners brought in the best bid.

A special session at the Legislature was called by Gov. Kenneth Mapp on Dec. 17 to discuss the HOVENSA sale deal, but no action was taken on the governor’s negotiated terms.

Last Monday, the Senate allowed public comment from St. Croix citizens on the operating agreement terms during a meeting of the Committee of the Whole that went past midnight. No person or organization testified definitively in favor of the deal.

The new South Shore oil facility could become a key terminal for clean products storage and break-bulk and build-bulk purposes in the Caribbean.

It has the potential to be a “choice terminal” in the Caribbean, when compared with BORCO and Statia, for clean oil products due to its location relative to South America, in-line/closed loop blending capabilities and ship berths that are protected from weather, the V.I. Free Press has learned.

HOVENSA was a refinery, and it boasted efficient logistics for crude and oil products storage as well as marine loading and unloading facilities.

Following the U.S. crude export liberalization, HOVENSA could also be used for storing U.S crude if the economics work.

Also, the terminal port asset on St. Croix offers room for potential storage expansion as well, depending on capitalization of the new owner.

Oil industry experts say that the controversy surrounding the HOVENSA asset sales during its bankruptcy proceedings could result in a long-drawn-out hearing at the Senate and/or courts.

Limetree Bay was the stalking horse bidder, beating out other interested parties in the auction, including Buckeye Partners LP and about three metal-scrapping companies.

Buckeye’s bid for HOVENSA’s terminal assets was $345 million, industry sources said. Although Buckeye’s bid was higher than Limetree’s, Buckeye’s bid does not include liabilities.

Also, Limetree’s bid was selected and backed by the governor’s office, pushing it ahead of Buckeye, they said.

The governor’s office believed that Limetree’s bid was the highest and best bid, meeting both requirements for the Hovensa auction process. This is even though Buckeye had the highest bid, but not the best bid in the eyes of Mapp’s office.

The governor’s office was also impressed with ArcLight’s potential to raise terminal utilization in the future as well as establish a possible path to restart the 500,000-barrels-per-day refinery down the road, sources said.

The governor’s office also believed that Limetree understood the environmental liabilities linked to HOVENSA, and Limetree would be in the best position to remediate any environmental issues.

Buckeye’s bid was deemed second-best to Limetree’s, partly due to a walk-away clause in Buckeye’s bid. Buckeye, formerly known as Buckeye Pipeline Company, would drop the HOVENSA bid if it cannot get an approval for the deal from the Federal Trade Commission.

The controversy surrounding the HOVENSA assets could result in a long-drawn-out hearing in the Senate or in the courts or both.

Limetree Bay and Buckeye were interested only in the 32-million-barrels-per-day capacity oil storage terminal at HOVENSA, and traders had told sources previously that the St. Croix terminal has an operational capacity of about 15 million to 16 million barrels. The remaining 50% of the capacity was unused and mothballed.

It was reported in September that the earliest date that the HOVENSA oil terminal could return to operational status would be at the end of 2016 if everything goes well. The terminal has been shut since February 2015 after a failed asset sale process.

The HOVENSA restart could also be delayed by the Legislature and or the court system or both. Also, industry experts say that it will take several months to prep the terminal for operational restart.

Previous post

CHRISTMAS SHOCKER: Hannah Davis and Derek Jeter May Be On The Outs

Next post

Veep Joe Biden Back In St. Croix Again Starting Today

The Author

John McCarthy

John McCarthy

John McCarthy has been reporting on the U.S. Virgin Islands and the Caribbean region since 1989. John's articles have appeared in the BVI Beacon, St. Croix Avis, San Juan Star and Virgin Islands Daily News. He is originally from Detroit, Michigan.

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *