ST. CROIX — Six years after HOVENSA shuttered on St. Croix, oil refining is set to restart on the island at the same south shore facility that was once the location of a booming oil industry, this time under the leadership of Limetree Bay Terminals, whose owner is ArcLight Partners, LLC.
The ratification of the agreement, Bill No. 32-0246, between the Government of the Virgin Islands and Limetree Bay Terminals, came during a daylong Senate session at the Earl B. Ottley Legislative Hall in St. Thomas on Wednesday that ended around 12:12 a.m. Thursday, with 9 senators voting for the restart of oil refining, 5 voting against and one absent. The breakdown of votes is as follows:
The majority moved to separate the Government Employees’ Retirement System and hotel development at Yacht Haven Grande agreements from the oil refining deal, to be dealt with separately at a later date.
When HOVENSA shuttered in 2012, the impact was equivalent to a major disaster that all but wiped out the middle class of St. Croix, sent thousands migrating for opportunities — some to maintain the lifestyles that HOVENSA had afforded — and caused the closure of multiple businesses, among other economic disruptions. The closure of the refinery was upon a recession that the territory was reeling from, and the U.S. Virgin Islands never quite recovered from its heyday of economic boom.
The Limetree Bay oil refining agreement, though not on the level of HOVENSA relative to employment, will help St. Croix regain its economic footing, with 1,300 jobs being created during the constructing phase (turnaround period), which is expected to start this year and continue through 2019, and about 700 jobs once oil refining starts in 2020.
ArcLight Partners, LLC is investing $1.4 billion in the restart of the refinery, and with the ratification of the deal will move quickly to prepare the facility for refining to take advantage of a critical window of opportunity that ArcLight and Limetree Bay officials say will lead to the maximization of profits during a four-year period.
According to ArcLight and Mapp administration officials, a change to the rules of the International Convention for the Prevention of Pollution from Ships (known as MARPOL), lowers the amount of sulfur permitted in marine fuels (also known as bunker fuels) from 3.5 percent to 0.5 percent. When the rule revision comes into effect, the officials said, it will create an economic opportunity for the refinery to process discounted feedstocks and to produce low-sulfur marine fuels and other high value refined products. The change is set to take effect in 2020, and ArcLight is hoping to seize the window of opportunity with refining on the south shore ready also by 2020, allowing it to be one of the few refineries positioned that would be capable of meeting the new refining rules.
During closing statements ahead of the historic vote, senators gave reasons for their support or disapproval of the agreement.
“I do believe that the island of St. Croix needs that economic boost, Senator Sammuel Sanes said as he made his final case in support of the measure.
“Do I feel like we’ve gotten the best deal? Do I feel like this is the direction we want to go in? Do the people of the Virgin Islands really want this refinery?” Senator Positive Nelson, who ultimately voted against the deal, wondered aloud.
Senator Dwayne DeGraff complained that not enough time was given and kept going back to part of the agreement that sees Limetree Bay Terminals giving the Government of the Virgin Islands a $40 million advance as part of the signing, only to retrieve that amount, along with $8 million in interest, back through tax savings. Mr. DeGraff voted against the restart bill.
Senator Janette Millin Young, whose intention to vote against the measure was detectable since the July 20 Committee of the Whole hearing on St. Croix, held her stance and voted against the measure, stating that lawmakers had rushed the process, “but I ain’t no Russian,” she said.
Senator Alicia Hansen, who voted against the bill, gave a number of reasons for her decision, including concerns about the environment.
Senator Tregenza Roach shared his uneasiness with a number of matters as they relate to the agreement, and pointed to a portion of the deal that defines a Virgin Islander qualified to work at the refinery as a U.S. citizen or Green Card holder who have lived in the territory for one year. (During the July 20 hearing, lawmakers were reminded by Attorney General Claude Walker that the U.S. Virgin Islands is owned by the U.S. and that defining who constitutes a local any stricter would violate individual rights of American citizens.)
In support of the measure, Senator Janelle Sarauw spoke of the advantage that Limetree Bay would have were it to restart refining in 2020, giving it that crucial window of opportunity to be one of the leaders in refining low sulfur marine fuels. “The urgency of 2020 is that the territory has the ability to have a monopoly and be on the edge and they have an edge when it comes to that market, and I don’t think that the government or Limetree did a good job of explaining why 2020 was the date that they were pushing for,” Ms. Sarauw said.
She concurred that the current deal isn’t perfect by stating that no agreement is, and stressed that she wasn’t given any kickbacks for her vote. But after looking at the agreement’s pros and cons, she said the responsibility falls on government departments and agencies with certain jurisdiction relative to the agreement — namely the Department of Planning and Natural Resources for environmental enforcement, and the Department of Labor for job protections — to assure that the territory sees its full benefit as part of the deal.
Senator Novelle Francis spoke of a number of benefits that become available to the territory upon the agreement’s approval and implementation. He spoke of the economic boon for St. Croix that is expected to trickle down to multiple sectors of the economy. The senator also mentioned a consultant that was hired by the Legislature who Minority caucus members said was paid $50,000 to advise lawmakers. He said while the consulting firm raised some good concerns, it said, “In every agreement and contract there is an opportunity to improve upon one way or the other.” The consultant, according to Mr. Francis, added that the agreement itself was not a deal breaker.
Senator Marvin Blyden, like others who supported the agreement, spoke of the jobs that the restart of refining would bring. “I do believe that when opportunity knocks you must take advantage because it only comes once; it does not come too often,” he said.
Senator Kurt Vialet spoke of the 2015 Limetree Bay Terminals agreement, and how the results had outperformed expectations. “When we went over the original terminal agreement in 2015 we never realized that out of the 80 jobs that we ratified that it would have grown to 800-plus. We never realized that the $120 million investment would have grown to $260 million as we speak, not including payroll costs,” Mr. Vialet said. “So when you look at the impact of that one deal that was done in 2015, and you look at the fact that we were able to generate 800 jobs, that is significant.”
He added: “A lot of individuals say, ‘Well, who get those jobs? Are most of those jobs outsiders?’ Well I could vouch for the many individuals that I personally know. The many former students that graduated from [the St. Croix Educational Complex] that are now in the plant working and have been employed for the last couple years.”
Mr. Vialet also assailed members of the Minority caucus, who he contended have found fault with a number of economy-stimulating agreements but at the same time claim they support diversification.
“We cannot continue to walk away from everything. I heard the same argument with the horse race agreement… We heard the same, same dialogue: ‘Don’t pass it, they’re not going to develop, they’re not going to do this’ — every single development you’re going to hear the same dialogue and then you say you want to diversify. How do you want to diversify when you don’t want anything? You’ve got to want something.”
Mr. Vialet went on: “But if you’re going to walk away from 1,500 jobs and a possible 800 permanent jobs that create a middle income base, then that’s up to you. If you’re going to make a decision based on politics, that is up to you. My decision isn’t based on who sent down an agreement, my decision is based on whether or not it is in the best interest of the Virgin Islands.”
Majority Leader Neville James described the agreement as a bases clearing triple, using baseball terms. “It’s not a home run because I, for one, agree with the minority leader in that I believe we have better negotiators in the Legislature than in the executive branch… But I know my role, and we’re not in the negotiation business down here, we are in the ratification business, and tonight it’s fish or fowl, baby, and we’re going fishing,” Mr. James said, adding emphatically, “I’m voting yes; St. Croix’s been suffering for 6 plus years.”
To give perspective of HOVENSA’s impact on the island, Mr. James, doing some quick math, added 2,000 employees by $70,000 per anum, the base salary at the former refinery. The amount is equivalent to $140,000 million that went directly to middle class households.
Senator Jean Forde said while he was not satisfied with all the answers to his questions, and while he did not agree with all aspects of the agreement, “I am faced with the responsibility of making a decision that I feel is the best interest of the entire Virgin Islands.”
Senator Nereida Rivera-O’Reilly, who throughout the July 20 hearing and Wednesday to Thursday session sought guarantees from testifiers that the environment would be protected, said she was satisfied with the responses she received.
“I am very comfortable with the agreement’s conditions and provisions that deal specifically with the environmental, health and safety of our community, and our ecosystem,” she said. “I am very comfortable that the agreement ensures that the operators of both the terminal and the refinery, as well as the HOVENSA Remediation Trust will continue to do what they need to do to clean up the site and to operate a facility that meets all E.P.A. [Environmental Protection Agency] standards and local.”
Senate President Myron Jackson sought to set the record straight on his decision to support the agreement. “For the record, I was not bought by the governor and my vote is not related to the governor’s reelection,” he said. “It’s not tied to him asking me to vote for it, but at the end of the day what’s in the best interest of the people of this territory.”