The Senate voted just after midnight Thursday morning to approve changes to Limetree Bay’s operating agreement to smooth the way for a promised partial restarting of the shuttered former Hovensa refinery on St. Croix.
Gov. Kenneth Mapp presented the deal-sweetening refinery terms as an omnibus package with multiple changes to the government retiree system’s funding and board; a $10 million loan to a hotel developer and more. But senators split off the non-refinery elements and sent them to committee for more review.
Senators telegraphed the move to split off the components of Mapp’s proposal when the Legislature met in committee of the whole and took testimony July 20.
The vote was on a majority-minority basis, with support and opposition both on St. Thomas and on St. Croix, where Limetree Bay is located. Voting to approve the refinery deal were: Sens. Marvin Blyden (D-STT), Jean Forde (D-ST), Novelle Francis (D-STX), Myron Jackson (D-STT), Neville James (D-STX), Nereida Rivera-O’Reilly (D-STX), Sammuel Sanes (D-STX), Janelle Sarauw (I-STT) and Kurt Vialet (D-STX). Voting no were: Sens. Dwayne DeGraff (I-STT) Alicia “Chucky” Hansen (I-STX), Positive Nelson (ICM-STX) and Tregenza Roach (I-STT). Sen. Brian Smith (D-At Large) was absent at the time of the vote but attended the earlier hours of the nearly 14 hour session. Independent member Sarauw is a member of the governing caucus and Democrat Young is not.
“Concerning environmental protection, did the Department of Planning and Natural Resources conduct tests for toxins at the refinery?” Sen. Novelle Francis asked DPNR Commissioner Dawn Henry.
“Testing for toxins was done in a local lab. DPNR tested the soil and water then sent it to a lab off-island,” Henry said.
Commissioner Henry said that the Hovensa Environmental Response Trust Fund has $66 million to conduct and pay for activities required to comply with the federal Resource Conservation and Recovery Act. The response trust purchased pollution liability insurance of $75 million to cover unknown environmental condition in the future.
Limetree Bay entered an agreement with the territory in 2015 that envisioned a possible restart to the refinery and no new deal was formally necessary to allow them to start. But making a profit at the refinery is not a given and Gov. Kenneth Mapp’s administration negotiated changes to the terms with Limetree Bay and its parent company, ArcLight Capital.
Limetree Bay, ArcLight, V.I. government and V.I. government advisors all testified Limetree Bay intends to start construction very shortly and invest up to $1.4 billion to get the refinery started up by 2020. But the new agreement resets the clock for Limetree Bay to “evaluate” if it will or will not restart refinery, effectively giving it five more years to decide one way or the other.
The current, 2015 agreement envisions a refinery and sets annual payment rates for it. It gives Limetree Bay three years to decide whether to restart or take down the refinery and sets payments and terms for a refinery. That evaluation period ends the first week of January 2019. If it did not restart the refinery, Limetree Bay would have another three years – until just after the end of 2021 – to deconstruct the above-ground portion.
The proposed new agreement starts that clock anew, giving ArcLight and Limetree Bay three more years, or until 2021, to evaluate whether or not to restart. And it adds a new provision, not in the current agreement, allowing Limetree Bay to unilaterally extend the evaluation period by up to two more years, or until late 2023. Then it would have three more years – until late 2026 – to actually deconstruct the refinery.
The other major change between the 2015 agreement and the one just approved by the Legislature is in how the V.I. government gets paid. The territory is selling land and housing to the refinery for $30 million – an exchange contemplated in the 2015 agreement. And Limetree Bay is lending the government $40 million, with the government paying it back through future taxes.
Limetree Bay’s 2015 agreement says if it restarts the refinery it will pay the government either 17.5 percent of refinery income or whatever amount the parties agree to in writing.
Under the new agreement, if the refinery does restart, it has to pay the government a “base” payment of $22.5 million a year. But there is a formula that can increase or decrease that amount. If the volume of refining is below 10,000 barrels for the year, the refinery pays nothing. If production levels are good, but the difference between what the refinery pays for crude and what it charges for refined products dips, the refinery, if restarted, will pay a minimum of $14 million. If profits are good, it will pay a maximum of $70 million. Those payments go first to pay off the $40 million Limetree Bay will advance the government. If the refinery is not restarted, the $40 million is paid off from Limetree Bay’s current oil storage operation. That operation generates a minimum of $7 million per year and has reportedly generated closer to $11.5 million per year for the government. Those payments in lieu of taxes would be cut in half until the $40 million is paid back.
If all goes as described, the project has the potential to employ more than 700 full time workers once complete and considerably more than that during the construction phase.
Separately from the potential refinery, Limetree Bay is investing in a $125 million single-point mooring off St. Croix’s south shore, with a pipeline to transport oil to its facilities. This will enable the storage facility and any refinery operation to serve the largest supertankers. (See Related Links below)
This some bullshit and tired of the government.