By Gary McWilliams
Nov 7 (Reuters) - A $1.6 billion plan to refurbish a
long-idled Caribbean oil refinery is about 75% complete and
could begin delivering fuel supplies early next year, company
and government officials said this week.
The Limetree Bay Refining project is a bet on demand for
low-sulfur fuels to meet a Jan. 1 global mandate for ocean-going
vessels cut air pollution. The St. Croix, U.S. Virgin Islands,
venture is run by private equity and commodity trading firms
with oil major BP Plc providing crude oil and marketing
the plant's output.
Once restarted, the plant will be able to process up to
210,000 barrels per day of oil, a fraction of the 1,500-acre
(607-hectare) plant's peak capacity in the 1970s of 650,000 bpd.
Arclight Capital Partners, a Boston-based private equity
firm, acquired the refinery with Freepoint Commodities in 2015.
The two operate the plant's about 34-million-barrel oil storage
terminal while resurrecting part of what once was one of the
world's largest refineries.
BP has taken a larger role as delays arose due to the aged
equipment's near eight-year closure, said people familiar with
the matter. Limetree Bay had hoped to complete the restart this
year with two crude processing units in operation.
Instead, it will start operations early next year with one
crude processing unit and may later revive a second crude unit
if profits allow, Brian Lever, Limetree Bay's chief executive,
told a St. Croix senate panel on Wednesday.
BP had no immediate comment on the change.
Lever declined comment on the delays or when product
deliveries could begin through an Arclight spokesman. The
company continues "to make strong progress on the refinery
restart," adding it now expects to put oil into processing units
early next year.
Arclight and its partner aim to profit from expected high
demand for low-sulfur marine fuels from the IMO 2020 mandate. It
also could benefit from the summer closing of Philadelphia
Energy Solutions' 335,000-bpd refinery that supplied the U.S.
East Coast.
Kirk Callwood, executive director of St. Croix's public
finance authority, told the senate panel that repairs will
continue into December, followed by a commissioning period and
then startup.
The St. Croix plant shut in 2012 facing requirements to
spend some $700 million on pollution controls and a $5.4 million
civil penalty to settle violations of the U.S. Clean Air Act
that were levied on then-Hovensa, a venture between Hess Corp
and Venezuela's state-run oil firm PDVSA.
Negotiations on an agreement with the U.S. Department of
Justice and Environmental Protection Agency to settle prior
violations of the Clean Air Act are nearly complete, Lever said
in prepared remarks. The company must reach agreement on the
2011 consent decree before the refinery can restart operations.
(Reporting by Gary McWilliams
Editing by Marguerita Choy)
BP (BP.)
