Aug. 19, 2002 – There are still a few bugs to be worked out, but the huge, and hugely expensive, new coker at the Hovensa refinery is officially up and running — and has been since Aug. 9.
The coker project took more than two years and some $600 million to complete, but the payoff is expected to be worth the investment. The refinery will be able to reduce its costs for crude oil because Hovensa now can process a heavier, and less-expensive, grade of Venezuelan crude than had previously been possible.
"The company achieved the commencement of the manufacture of commercial quantities of marketable products from the coker project on Aug. 9," a Hovensa release circulated on Monday stated.
In compliance with an agreement between the company and the V.I. government, Rene Sagebien, Hovensa president and chief operating officer, sent a letter to Gov. Charles W. Turnbull certifying that this had occurred.
Most U.S. refineries have cokers. Sagebien termed getting the one for Hovensa operational "a welcomed development," given that the oil refinery industry, including Hovensa, "has been experiencing poor financial results … due to a significant drop in demand for petroleum products" since the terrorist attacks on the U.S. mainland last Sept. 11.
While Hovensa will benefit from its new capabilities with the coker, so will the V.I. government, Sagebien said. Effective on the date of the "commencement of the manufacture of commercial quantities of marketable products from the coker project" — that is, on Aug. 9, he said, Hovensa's property tax obligation to the government increased from $12 million to $14 million a year. The Hovensa president also noted that the territory benefitted from the money that circulated in the local economy during the construction of the coker.
"As was expected during the startup of such a large facility, mechanical and electrical problems were encountered," Sagebien said, "but they are being resolved." He said he anticipated production "being increased to full capacity during the next few weeks."
Hovensa — a joint venture of Amerada Hess, owner of Hess Oil Virgin Islands Corp., and the huge government-owned oil company Petroleos de Venezuela — was created two and a half years ago to facilitate the process of obtaining $600 million in financing to build the coker. Ground was broken on June 2, 2000, with completion initially targeted for February 2002. The primary contractor, Bechtel International, and its subcontractors had some 1,500 persons working on the project as recently as three months ago.
Hovensa officials have said there are plans to build processing units and auxiliary equipment that will enable the refinery to comply with federal regulations reducing the maximum quantity of sulfur allowable in gasoline by 2004.
The refinery "also plans to modify a number of existing processing units to comply with a regulation that reduces the quantity of sulfur allowed in diesel fuel effective in 2006," an earlier release stated. Work on these facilities is expected to begin in mid-2003 and will probably be undertaken in two phases, company officials said.
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