Oil refineries don’t usually make people emotional. Unlike the HOVENSA refinery on St. Croix, however, most don’t have the shadow of the late Leon Hess looming over them and a half-billion dollar investment in the works.
The poignant part of Friday’s groundbreaking ceremony for HOVENSA’s long-awaited coker project came when Hess’s son, John B. Hess, chairman and CEO of Amerada Hess Corp., spoke of what the $535 million investment would have meant to his father. In a voice cracking with emotion, John Hess said the St. Croix refinery and the jobs it has produced for the people of the Big Island for 33 years represented his father’s "greatest industrial achievement."
"My father would have been very proud," John Hess said.
Leon Hess died last summer at the age of 89.
Company officials say the delayed coking unit will enable the refinery to process heavier Venezuelan crude oil, for which HOVENSA has a long-term supply contract with Petroleos de Venezuela S.A., that country’s state-owned oil company. Without the coker, HOVENSA is forced to process crude oil that is $2 to $4 per barrel more expensive than what competitors process.
Prior to the creation of HOVENSA, Hess Oil of the Virgin Islands Corp., or HOVIC, a subsidiary of Amerada Hess, had lost some $1.2 billion since 1991. To stem the hemorrhaging, HOVIC formed a joint venture with PDVSA in 1998 to form HOVENSA.
The joint venture allowed the new company to finance the sorely needed coker, a facility that 70 percent of U.S. refineries already have, John Hess said. He heaped praise on the management of PDVSA, without which, he said, HOVIC would have "probably had an impossible time surviving the last two years."
HOVENSA estimates that at the peak of construction there will be 2,000 people working on the coker, which is expected to be completed in early 2002. Engineering work and the purchase of equipment for the project began last fall. About 200 workers were employed initially to prepare the site. Manpower needs will increase over a 10-month period and peak at about 2,000 workers.
On Friday, most guests at the groundbreaking viewed the project as an economic catalyst for St. Croix.
"There’s no question," Lt. Gov. Gerard Luz James II said. "With the coker project starting up, we’re going to see an infusion of funds into the economy."
Gov. Charles W. Turnbull said the project will help send a message that the territory is ready to work with investors. The government will regulate, he said, but not hinder business.
"Over-regulation stifles industry and commerce," he said. "We’ve got to have the right balance. We can’t tie the business industry up into knots and expect it to survive."
The St. Croix refinery, the largest in the Western Hemisphere, employs between 850 and 2,000 people and produces about 400,000 barrels of oil a day, although it has the capability to pump out 500,000 barrels a day.
