Jamaican bunkering firm WIPL that won an auction for a US Virgin Islands refinery aims to reopen the facility and more than double its capacity.
WIPL won the 18 December auction in a Texas bankruptcy court with a $62mn bid for the 200,000 b/d Limetree Bay plant, and says it will expand its capacity to around 450,000 b/d.
WIPL has until 21 January to close the sale. Waiting in the wings is runner-up bidder St. Croix Energy, a local start-up that submitted a $57mn bid, almost double the offer it made in a November 2021 auction that was later voided.
The refinery had an original design capacity of 525,000 b/d and was previously owned by Hovensa, a joint venture between Venezuelan state-owned PdV and US independent Hess that shut the facility in 2012.
“We are committed to and confident about successfully closing out the sale and moving towards maximizing the potential benefits that this refinery may have on improving not just local or regional but also global energy security,” WIPL said.
The company has not indicated how it will finance the acquisition. Even if it secures financing, WIPL will need to address formidable environmental and regulatory problems that led to the refinery’s shutdown in May 2021, four months after it reopened.
Former owner Limetree Bay — belonging to US private equity firm Arclight Capital Partners and US trading firm Freepoint Commodities — filed for Chapter 11 bankruptcy after suspending operations indefinitely because of “severe financial constraints.”
This followed a shutdown order from the US Environmental Protection Agency (EPA) because of coker accidents.
“WIPL is fully aware of past environmental mishaps,” it said. Its operation “will not only see us seeking not to repeat errors but also being mindful of the prescriptions and mandate of the EPA.”
New refinery operators “will need to engage with EPA regarding environmental compliance and permitting issues prior to the start-up of any operations at the refinery,” EPA said in a November letter to bidders.
The former owners spent $4bn to modernize the refinery, including upgrades that will allow it to use LPG for power generation, WIPL said.
The refinery will “support in a major way the energy requirements of a raft of countries including Puerto Rico, Trinidad and Tobago, Jamaica and sections of the US.”
A successful restart would buck a trend of Caribbean refinery closures.
By Canute James
Photo credit and source: Argus Media
Published: 12 January, 2022
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