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A coker malfunction contributed to the refinery’s shutdown and bankruptcy. (Source photo by Patricia Borns)
By Dylan Chase / Argus
HOUSTON
Petroleumworld 12 22 2021
Debtors involved in the bankruptcy of the owner of the idled 200,000 b/d St Croix refinery in the US Virgin Islands are pushing to sell the facility’s assets to a Jamaican bunkering company after naming another company winner of a bankruptcy auction in November
The Chapter 11 bankruptcy auction of Limetree Bay Refining has taken a new turn this week after bidding for the St Croix refinery was reopened in early December. Jamaica-based company West Indies Petroleum was the rightful winner of an 18 December auction for the refinery and recent attempts by the winner of a previously nullified auction to stop a sale amount to sour grapes, debtors argued today in the US Bankruptcy Court for the Southern District of Texas.
Although local start-up St Croix Energy was named winner of an 18 November auction to purchase Limetree Bay’s assets, debtors won a motion earlier this month to reopen the auction because West Indies’ chief executive suffered «a sudden and unforeseen medical emergency» on the eve of the November bidding deadline that prevented the company from authorizing a competing bid.
West Indies and Port Hamilton Refining and Transportation were then named joint winning bidders of the auction on 18 December with a $62mn offer that bested the $57mn offer of St Croix Energy, which was designated the «back-up bidder» in the event the sale does not close as planned.
An objection to that sale filed on 19 December by St Croix Energy represents «nothing more than unsuccessful bidders seeking to put their interests ahead of that of the Debtors’ estates and their creditors,» debtors argued in a filing today.
In addition to dismissing claims that reopening the auction was an illegitimate move, debtors argued in a sale hearing today that St Croix Energy’s plan to restart the refinery was ill-fated. St Croix Energy had argued that its bid was best because it could restart the refinery immediately with Limetree’s Environmental Protection Agency (EPA) permits, but debtors now «believe the EPA has rejected that plan.»
Hazy outlook
The US Virgin Islands government had cautiously supported St Croix Energy’s efforts to restart the refinery, although the company’s size and the facility’s technical shortcomings cast doubt over such a plan from the start.
The facility previously owned by Hovensa restarted in January 2021 after almost a decade off line, but the US Environmental Protection Agency (EPA) issued a shutdown order in May after oily mist was sprayed into surrounding communities. Limetree Bay filed for Chapter 11 on 12 July.
The St Croix refinery may have released tar, coke, sulfides, oil, or other petroleum products into the environment between October 2020 and May 2021, West Indies acknowledged in an asset purchase agreement filed yesterday. The US Department of Justice has a pending investigation connected to the refinery’s environmental issues, and the Occupational Safety and Health Administration issued $259,407 in citations to Limetree Bay Refining for operational infractions in November.
Neither West Indies nor the office of US Virgin Islands governor Albert Bryan responded to requests for comment about future plans for the facility following the closure of the Chapter 11 auction.
The St Croix shutdown is estimated to have cost the Virgin Islands 500-600 direct and about 150 indirect jobs, spurring the loss of around $1.8bn in economic activity.
The bid from West Indies and Port Hamilton Refining and Transportation is targeted to close by 21 January.
