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PRINTA week after Gov. John deJongh Jr. said in a televised address he expects the recently decommissioned Hovensa refinery to upgrade and reopen, sell to someone who will, or the territory will sue, the administration has released its independent study concluding the refinery could be profitable with upgrades.
In July, the government commissioned a comprehensive analysis by the New York-based firm of Duff & Phelps of the Hovensa refinery operations and Hovensa's proposal to convert the site to an oil storage facility.
The study concluded that the “highest and best use” of the Hovensa facility is as an oil refinery and that such a refinery would be profitable if certain upgrades were made,” deJongh said in a statement earlier this week – conclusions he shared in his earlier televised address before releasing the study itself.
The study concludes the main impediment to Hovensa's profitability as a refinery lies in its dependence upon petroleum to fuel its own operations. And if it converted to liquid natural gas, it could overcome its structural disadvantage compared to stateside refineries and be economically viable as a refinery.
See the full report here: [Duff & Phelps – Hovensa Highest and Best Use].
So with 2 BILLION in upgrades and re-opening expenses, the refinery MIGHT make money, depending on market conditions.
Ask yourself this: If Hovensa reopened as suggested, and sold stock to the average Virgin Islander to raise money to convert and re-open, would YOU invest in the company. If not, then you truly don't believe the refinery could operate profitably. And if it cannot, what is the point of re-opening?
Did it really take a "comprehensive study" to let these people know that Hovensa couldn't be used for anything else but as an Oil Refinary or an Oil Depot. Seriously...WOW!
Hess Oil stock is doing fine, Hovensa is not doing so well. In order for this company to be profitable, they must diversify.
Better negotiations must be a factor within itself. Hovensa must be negotiated to better serve in favor of the people of the US Virgin Islands and not for the self-benefits per govenor and associates.
These studies were done in great detail, for the years that HOVENSA was losing money.
They're nowhere near as viable as this government report would have you believe.
Does the VI government have $5-6 billion to invest into HOVENSA so they might, MIGHT break even from an operation standpoint?
It all sounds good on paper but its not that easy is real life. This is basic economics, who here can own a business and operate in the negatives for years and stay open? I know I wouldn't, yeah the governor is trying but this same exact analysis could have been done years ago and given to wapa. He is riding Hovensa but they are not to blame really. The government is to blame for leaching off of Hovensa for all these years. Does anyone but me remember when there was another oil company that wanted to build an oil refinery right next door to Hovensa? Or what about Beal space stations? All these years they were comfortable and envisioning that Hovensa would keep them afloat for many years to come but not realizing they had no contingency plan. Obviously hovensa had a contigency plan which is to operate as an oil storage facility. What about the governement. Every opportunity that came to St. Croix was shot down, in a heart beat, now reality has caught up with us the government is scrambling around looking for an unrealistic solution. How about wapa invest in LNG and shed a saving on the consumers instead of Hovensa sheding a savings on Wapa. This whole report is about WAPA in a nut shell. All this LEAC and there is no upgrades or plans for upgrades. Actual usage $43 LEAC $125, WAPA should be $125 closer to upgrading their facility.
Fact - Hess, Hovensa, etc have long since controlled St. Croix's Legal Department. The very idea that they could be paying $1/yr tax for so many years shows that "somebody" was payed off.
Fiction - The USVI Government is going to Sue Hovensa and win?
Fact - Suites cost money, lawyers are not cheap. The lawyers in the VI as elsewhere are bought and sold and have "belonged" to HESS Corp for sometime now. Hovensa has deeper pockets than the bankrupt government... and the deepest wins.
Fiction - The USVI Gov is going to sue Hovensa and win.
Fact - This is just a delayed knee-jerk reaction by the governor, to detract away from the fact that had the "leaders" done their due diligence, St Croix would not currently be in this predicament.
Fiction - The USVI Government is gonna sue Hovensa and win?
I don't see the issue with paying $1 a year for SUBMERGED LANDS. It is the same charged to the Renesance park next door to them. Why should they be penalized?
And don't forget who built the container port and gave it to the VI government FOR FREE. If they had not done that, we would still be docking in Gallows Bay.
I wonder, does the GVI charge the Port Authority a submerged lands fee?
2012, I love your fiction statement, but it is so true. Who does the governor think he is fooling. I look at it this way, if you can sue a business for shutting its doors for losing money, why can't the government employees sue the government for their unconstitutional 8% pay cut. I can name numerous business that were shut down because of wapa and their rediculous utility bills, I don't see the government kicking up a storm with wapap and trying to save those businesses. This whole thing sounds like Hovensa didnt want to give the governor what ever pay off he was asking for so now he is trying to fight back. We need to open our eyes and start to do things for ourselves and stop looking hand outs. That half a million dollars that was payed to this consulting firm could have damn well been a down payment for a new unit at wapa. I am sure Hovensa did their own analysis of the natural gas situation because this was discussed during the senate meeting they had back in the first quarter of the year. Obviously they don't have the fundings for the project. I wonder if dejongh knows that Hess was fronting money to Hovensa just to keep it afloat in 2011. Tell him be realistic and not retarded.