Brian Lever, President and COO of Hovensa, was the guest speaker at the USVI Hotel and Tourism Association’s annual meeting Tuesday at the Divi Carina Bay Resort ballroom. Lever gave details about his company’s transition from a refinery to an oil storage facility, but his most eye-opening comments were in regard to his desire for a new concession agreement with the VI government.
Lever said that Hovensa’s previous concession agreement was tailored specifically for the running of a refinery. Since his company no longer refines oil, he said, that agreement was moot. The company is currently operating under an interim agreement that expires at the end of the year.
Calling it a “critical issue,” Lever stressed the need for hammering out a long-term agreement soon if Hovensa is to prosper.
“Until we have that in place, we really can’t plan our business as we’d like to because we don’t know if we’ll get an agreement,” he said. “That is really precluding us from entering into any long term contracts with potential customers,”
“So we’re in this period of uncertainty, both from the government perspective and from Hovensa’s perspective,” he continued. “We really want to shorten it and get to the conclusion to the satisfaction of both parties as quick as we can. That is our goal.”
Lever stressed that Hovensa would still play a large role in the territory, especially in the field of gasoline distribution. Though the company will no longer produce its own fuel, Lever said Hovensa intends to purchase gasoline from other companies and resell it to local gas stations.
It appears there is little alternative to this plan. Lever pointed out to the crowd that there is no independent jetty or oil storage facility on the island.
“There’s no other way to get fuel on St. Croix unless it comes through Hovensa’s jetty,” he said.
At another point of the speech, he attempted to assuage any fears of a gas shortage.
“There also has been a lot of talk about whether St. Croix is going to have gasoline available,” he said. “I want to put your mind at rest. Yes, assuming we get the concession agreement from the government.”
Lever outlined the company’s new business plan. He said that the goal was to make the most of the former refinery’s 30 million barrel storage capacity. Other companies would rent that space to store oil in various stages of refinement, from crude to gasoline.
Lever said there were many reasons why a company may want to store oil on St. Croix. He described several hypothetical clients, such as a company wishing to buy a large sum of oil now and storing it in anticipation of oil prices going up in the future.
Other potential clients include shipping companies that may want to use St. Croix as a refueling station or companies that may buy more oil than they can store as part of a bulk discount deal.
While Lever described the future of Hovensa, he reiterated several times that the scale of the company would be greatly diminished.
He said that the company currently has 273 employees, but that number should be down to 100 by the end of the year, with an additional 30 contract employees assigned to maintenance duties.
Lever said there could also be additional laborers hired to help finish the clean up of the refinery. As part of the “mothballing” process, all of the refinery’s inner workings are being scrubbed clean of hydrocarbons. Lever said that there were still thousands of miles of pipe and 200 tanks that needed cleaning, a process that should take 18-24 months.
Lever reiterated that the refinery would not be dismantled, saying that the owners wanted “to keep their options open.”
However, he did indicate that some of the “trailer” housing in the company’s neighborhoods would likely be torn down. The company is still in discussions about what to do with the concrete homes.
“It is our intent to remain a viable business on St. Croix into the future,” Lever said at the end of his speech. “Yes, it’s not 2000 jobs, but 130 jobs is better than nothing.”
After the speech, Lisa Hamilton, president of USVIHTA, explained that the organization invited Lever out of concern for how the refinery’s closing would ultimately affect the tourism industry. She cited concerns about rising utility rates and the loss of money on the island.
“Those 2000 workers represented 2000 people getting a paycheck,” she said. “The local people go to the restaurants. They take advantage of the activities and the attractions.”
She appreciated Levers remarks, but said that not all of her concerns were addressed and added:
“I don’t think anything said here today was new news.”