ArcLight’s goal is to have refined crude oil at Limetree Bay by January 2020
Ending months of speculation, Governor Kenneth Mapp has declared a milestone agreement between the Government of the Virgin Islands and ArcLight Partners, LLC, the owners of the Limetree Bay fuel storage terminal, for fuel refining at the south shore facility.
The deal to restart refining at the former HOVENSA facility, provides that the owners will invest approximately $1.4 billion to restore the existing refinery over the next 18 months. During the time, more than 1200 construction jobs will be created and once the turnaround phase is over as many as 700 permanent jobs.
It was notable that the governor did not mention British Petroleum, although multiple sources, including a reliable Mapp administration person, said was part of the agreement.
To the already 750 currently working at Limetree Bay would be new employees of the addition of 700 permanent jobs. 200,000 barrels of crude oil would be produced daily, under the new agreement. The number lessens in comparison to HOVENSA’s peak output of 700,000 barrels per day, but it is significant nonetheless.
“This agreement is great news for the people of the Virgin Islands as we continue to grow and expand our economy. The restart of the refinery will inject hundreds of millions of dollars into our economy, generate new tax revenues to our government, and create hundreds of non-refinery jobs in addition to those created at the refinery itself,” the governor proclaimed.
Fuel refining would promote growth territory-wide, even when the St. Croix economy stands to benefit the most from the restart. A 110-room upscale lifestyle hotel branded as either Hilton, Hyatt or Intercontinental is to be constructed on St. Thomas. A direct flow of funding from the agreement to help it remain solvent for at least the next five years, will be received by Government Employees’ Retirement System (G.E.R.S.)
ArcLight Partners, upon closing of the transaction, will make a closing payment to the Government of the Virgin Islands of $70 million, providing $30 million for the purchase from the government of approximately 225 acres of land and 122 homes. $40 million prepayment to the government will also be provided by the closing payment for taxes by the new refinery entity created by ArcLight Partners. Limetree Bay will make annual payments to the government of $22.5 million, once refining at the facility commences, and after crediting the new entity its $40 million in prepaid taxes.
ArcLight will detail its strategy to hire 1,200 workers to prepare for refining, during the ratification process, with Virgin Islanders given first preference in all hiring. PWKD07082018
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