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U.S. halts operations at Caribbean oil refinery after breakdowns

CommoditiesMay 14, 2021 05:15PM ET
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© Reuters. FILE PHOTO: Signage is seen at the headquarters of the United States Environmental Protection Agency (EPA) in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly

By Laura Sanicola

WASHINGTON (Reuters) -U.S. regulators on Friday ordered the Limetree Bay refinery on St. Croix, U.S. Virgin Islands, to cease operations for at least 60 days, throwing the multibillion-dollar overhaul of the massive plant into jeopardy.

The Caribbean refinery has suffered several financial and operational setbacks since its private equity owners sought to restart the 1,500 acre (607-hectare) facility idled since 2012. It voluntarily stopped processing this week after showering nearby homes with an oily mist for the second time this year.

The incident exceeded the plant's permit for sulfur dioxide emissions, the U.S. Environmental Protection Agency said. The EPA ordered the facility closed "due to multiple improperly conducted operations that present an imminent risk to public health" and signaled it might take further action.

A Limetree spokeswoman did not respond to requests for comment. On Thursday, a malfunction in a processing unit led the company to send staff to inspect local properties. It advised residents not to drink from rainwater cisterns.

"Our current focus is on investigating and cleaning up areas of the community affected by the incident, and we will cooperate fully with the order EPA issued today," a Limetree Bay spokesperson said Friday, adding that the company is apologetic for the inconvenience.

Its former owners filed for bankruptcy in 2015, facing heavy losses and U.S. Clean Air Act violations that required millions of dollars in upgrades. In 2016, Boston-based private equity firm Arclight Capital Partners acquired it and recruited other investors including EIG Global Partners (NYSE:GLP) that put about $3 billion into a plan to begin processing 210,000 barrels per day of crude into gasoline, diesel and fuel oil.

Conditions at the old facility caused delays, as did the COVID-19 pandemic. After an extensive overhaul, operators last year began restarts that led to a fire. Oil rained on nearby homes for the second time in four months.

"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 in a statement.

Regan called for an independent audit of operations and for the refinery to develop a plan to correct repeated malfunctions.

The situation "has been an epic regulatory failure," said Judith Enck, a former EPA administrator who oversaw the facility. It should remain closed until Limetree owners "can demonstrate that they can safely run the facility. To date, they have not," she said.

EPA officials descended on St. Croix last month after malfunctions shut nearby schools and public buildings and sickened residents. The island's Department of Planning and Natural Resources determined there had been releases of toxic sulfur dioxide gases.

Limetree Bay had been fighting the agency's assertions. Required to monitor outside the plant for sulfur dioxide (SO2) emissions, it said it found no elevated levels of SO2 nearby.

EPA has alleged Limetree Bay violated the Clean Air Act by failing to operate five SO2 monitors in the community.

Limetree later agreed to resume monitoring.

The EPA said the Clean Air Act gives it authority to halt operations if the refinery is "substantially endangering public health, welfare, or the environment."

U.S. halts operations at Caribbean oil refinery after breakdowns

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Comments (1)
Alan Rice
Alan Rice May 15, 2021 3:14PM ET
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Lemontree: Pay for all of the environmental damages BEFORE you consider a restart. Tic-toc.
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