Talks on the last major regulatory hurdle to restarting an idled Caribbean oil refinery have dragged on, threatening further delay to a private-equity backed venture that seeks to profit from a 2020 clean-air fuel mandate.
Limetree Bay Refining remains in discussions with federal and local officers on changes to a 2011 agreement with the previous owner of the refinery, Hovensa, a venture between Hess Corporation and Venezuela’s state-run oil agency PDVSA.
“The parties are about 80%-85% through the document and appendices,” stated Jean-Pierre Oriol, commissioner of the U.S. Virgin Islands Division of Planning and Natural Resources that is a party to the settlement.
Limetree Bay is undergoing a $1.6 billion refurbishment aiming to satisfy an International Maritime Organization requirement that ocean-going vessels cut sulfur emissions to reduce air pollution on January 1.
The mission will restore a division of the refinery to process around 210,000 barrels per day (bpd) of crude, down from 550,000 bpd before it filed for chapter protection.
The 2011 settlement required over $700 million in new pollution controls to settle breaches of the U.S. Clean Air Act. The modifications are anticipated to require spending less than $700 million, reflecting the smaller processing capability.
Limetree Bay and other refiners intention to process cheap, high-sulfur crude into clear fuels and seize anticipated higher margins as terminals and shippers stock up.
The re-functioning of the plans already has been pushed to early 2020 from late this year, a delay which means owners Arclight Capital Partners and trader Freepoint Commodities will miss initial demand for marine fuel with less than 0.5% sulfur.