May 24, 2021 [FixedIncome] – The U.S. Environmental Protection Agency ordered the partial closure of the largest private sector employer in the U.S. Virgin Islands for at least 60 days because of public health risks.
The EPA on Friday told the Limetree Bay Terminals and Limetree Bay Refining on St. Croix to stop refining oil because it is leading to an ?imminent risk to public health.?
Limetree owns and operates a terminal storage and marine facility in St. Croix with 32 million barrels of crude oil and petroleum product storage capacity, a deep-water port, and refinery units with total peak processing capacity of 650 thousand barrels per day.
The EPA action on the refinery is the latest of several problems it has had. The St. Croix oil refinery closed in early 2012 and cost 2,000 workers their jobs, pushing the islands into an economic decline that lasted through 2016. Its closing was a major trigger for the islands? economic and government revenue problems over the last 10 years.
Limetree originally planned for refining to commence in late 2019 or early 2020. Instead, it started this February. According to Reuters, Limetree spent more than $1 billion beyond its budget for restarting refining.
?Since February of this year, the refinery has experienced multiple major mishaps resulting in significant air pollutant and oil releases,? the EPA said Friday.
This spring, several of Limetree?s senior professionals, including its chief financial officer, resigned, according to Reuters.
?These repeated incidents at the refinery have been and remain totally unacceptable. Today, I have ordered the refinery to immediately pause all operations until we can be assured that this facility can operate in accordance with laws that protect public health,” EPA Administrator Michael Regan said. “This already overburdened community has suffered through at least four recent incidents that have occurred at the facility, and each had an immediate and significant health impact on people and their property.?
The EPA will use the 60-day period to work with the firm to remediate problems at the site. The agency could go to court to extend the freeze on refining beyond the 60 days.
Moody?s Investors Service rates the US Virgin Islands government Caa3 with a stable outlook. Excluding the debt of the US Virgin Islands Water and Power Authority, the U.S. Virgin Islands has about $2.11 billion in bond debt.
?The [payments in lieu of taxes] received from the refinery are a significant source of revenue for the government,” Moody?s Analyst Pisei Chea said, “but the refinery is not a large source of jobs. Most of the people who work at the refinery come from off island.?
Moody?s Senior Credit Officer Kathrin Heitmann said, ?The actions by the EPA highlight certainly a stronger enforcement of environmental standards and considerations of health implications than under the previous administration from an ESG perspective.?
Neither US Virgin Islands Gov. Albert Bryan Jr. nor Limetree immediately responded to requests for comment.
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