EPA adds regulatory obstacles to St. Croix refinery restart
The US Environmental Protection Agency (EPA) has informed owners of the idled refinery in St. Croix, US Virgin Islands, that they will need a new prevention of significant deterioration (PSD) permit before restarting the refinery. The owners will have to submit a PSD permit application assessing and planning controls for emissions of sulfur dioxide, nitrogen oxides, volatile organic compounds, hydrogen sulfide, carbon monoxide, particulate matter, and two subcategories of particulate matter determined by their size, PM2.5 and PM10.
“A PSD permit limits emissions to levels that can be achieved by applying the best available air pollution control technology, which for this refinery would likely result in significant reductions of emissions,” EPA said. The agency added that ownership has failed to maintain its Clean Water Act permit and lacks an appropriate Territorial Pollutant Discharge Elimination System (TPDES) permit.
EPA announced its decisions on the St. Croix refinery Nov. 17 after completing documents and sending letters to the owners the previous day. The documents include content indicating the agency may expect a legal challenge based on potential difficulties in meeting the standards for a PSD permit.
The owners of the idled refinery are international investors who set up Port Hamilton Refining and Transportation LLLP (PHRT) to take title to the plant in January 2022 after winning a competitive auction in bankruptcy proceedings the previous month. West Indies Petroleum Ltd. (WIPL), based in Jamaica, joined with PHRT in the bidding. The two companies have various ties to each other, including the fact that Charles Chambers, one of the owners of WIPL, describes himself as the largest shareholder in PHRT.
Restart plans
The owners have said they will restart the refinery at 180,000 b/d, initially suggesting it would produce bunker fuel meeting the tougher standards that went into effect as part of the International Maritime Organization’s (IMO) 2020 sulfur regulations (OGJ Online, Dec. 2, 2019).
Chambers, however, addressing the US Virgin Islands legislature July 14, 2022, seemed to broaden the fuel production plans for the refinery somewhat by saying it would help alleviate tight supplies for gasoline and diesel, though he did not offer specifics. He also said the goal was to restart the refinery in second-quarter 2023 “once financing is secured.”
The refinery was built by Amerada Hess Corp. in the 1960s and became a 50-50 joint venture between Hess and Petroleos de Venezuela SA (HOVENSA) in 1998. The refinery was shut down in 2012 and the site managed as an oil terminal after HOVENSA said it had lost $1.3 billion over 3 years and expected the losses to continue. The mothballed refinery was purchased in 2016 by private equity firm ArcLight Capital Partners LLC and commodities trader Freepoint Commodities.
Under ArcLight’s leadership, Limetree Bay Ventures LLC was set up to own and operate the St. Croix complex, then described as 650,000 b/d capacity. Over almost four years Limetree spent about $4.1 billion, only to encounter one problem after another in the restart efforts from December 2020 to May 2021. According to EPA, these included releases of a cloud of hydrocarbons and excess hydrogen sulfide, and oil droplets sprayed on neighboring homes and gardens and into drinking water cisterns. Limetree filed for bankruptcy in July 2021.
EPA cautionary notes
EPA’s Nov. 16 documents include summaries of what it called inadequate maintenance that contributed to the failed restart in early 2021. “Insufficient maintenance continued after Limetree filed for bankruptcy,” EPA said. “A smoldering fire broke out at the refinery's coke piles on Aug. 4, 2022, which was not suppressed until Aug. 26.”
In September EPA inspected the site and found what it called “a systemic lack of maintenance” at processing units, including “extreme corrosion in many cases to a degree resulting in extreme deterioration” that “severely compromised integrity and operability.”
Because Port Hamilton Refining and Transportation does not intend to restart all units, it is possible that the most corroded units simply can be left out of restart plans. But EPA’s documents suggested a restart will be costly, nevertheless.
“Both the length of time that the refinery has been shut down and the capital needed to make physical and operational changes to restart it are extraordinary,” EPA said.
