hovensa closing

That would really suck, loss of jobs would be devastating, what is the number of residents that work there as opposed to folks brought in to work or are here due to the refinery? Also what would be left behind? A massive rusting city of pipes that they probably don't plan on cleaning up?

It will be devastating. Not just direct employees, but the contractors and the ripple effect on the whole economy, businesses, professionals and government.

Nobody so far has cited any reliable source which even hints at such a possibility. The coconut telegraph isn't a reputable source of real information but a wonderfully ripe source of hearsay and general gossip mongering. If you fart on the North (side or shore depending on whether you're on STT or STX) it'll be smelled in the South within minutes and keep bouncing on ad nauseam replete with a multitude of added sound/light and musical effects which all grow commensurately.

http://seekingalpha.com/news-article/2047558-hess-reports-estimated-results-for-the-third-quarter-of-2011

nine months 2011 versus 2010

Income (loss) from equity investment in HOVENSA L.L.C. (133) (174)

That is in millions...

I think that is only half, PDVSA picked up the other half. Forth quarter I hear will be horrible for the hovensa loss and S/D of half of the remaining running part of hovensa will be very soon.

Yes its only Hess's half. Let's pray they figure out a way to refine profitably with oil at its current price. If not we are sunk as unlike the governement, private investors with skin in the game (i.e. shareholder's) don't take kindly to continued losses year after year.

From the Q+A section of the Q3 results:

Paul Sankey - Deutsche Bank AG, Research Division

And then finally for me on refining. You mentioned it was a margin story, the breakeven in July, August went into a severe September situation. Is it correct to characterize it as an asset that's really subject to margin vagaries? Or are there more operational and strategic actions you can take to improve performance there?

John B. Hess

Yes, as you know and recall that we took steps in the last year in our joint venture to downsize the refinery to increase the margin per barrel and also take some costs out of the business. That's all been successful. I think the benefit to that, we certainly saw at the beginning of the third quarter. But what happened were really 2 things. Gasoline margins came down in September, but also the front end of the crude market came up, and so margins were squeezed there. I think the refinery is in a more competitive position but it still has some competitive issues in entire fuel cost versus the Gulf Coast refinery that has the advantage of natural gases at feedstock. And that's an issue that we still look at. And as I've said before, it's a very small piece of our portfolio. We wanted to run reliably and securely, safely, and we're going to continue to do all we can to optimize its financial performance. And we'll always consider strategic options, but given the current environment, they're not that many, and we also have a partner that we also have to work with in that regard.

Also what would be left behind? A massive rusting city of pipes that they probably don't plan on cleaning up?

Again, this is total Coco Tel stuff, but I was told that they would have the EPA up their collective rears to mitigate hazards if they close. It would take a long time and a lot of money.

In response to:

"Again, this is total Coco Tel stuff, but I was told that they would have the EPA up their collective rears to mitigate hazards if they close. It would take a long time and a lot of money."
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Remember the plan that most investment companies are recommending to Hess is this. Change the focus of the "property" to be a Fuel Terminal. This plan would allow the company to avoid EPA since the "property" would still be open. A fuel terminal will need a small fraction of employees. This would be a virtual "shutdown" and the EPA would not have a case against the property owners. They would reserve the right to open up refining at any point.

With the property becoming a fuel terminal, the work force would be less than a tenth of its current numbers. As well, the taxes paid to the VI government would be considerably less and the VI government would have to change the way it spends money.

Another thought to the loses at least on Chavez's end.
He sells himself over priced lousy crude at $118 a barrel. So while Hovensa is losing money in one pocket he is making a killing in the other. Plus a tax write off. May be similar situation for Hess.
Hmmmmm*-)

Just announced on the radio, Hovensa held a meeting this morning with all employees and the place is being turned into a storage facility in one month and only employing 100 people to maintain it. This does not bode well for the island.

Just received the plant closing notice. They're walking 1900 employees out today. HOVENSA will be fully shut down by Feb 5th.

Bad, bad news!!!!!!

This morning, we announced that the HOVENSA refinery will commence shutdown of operations and become an oil storage terminal.

Losses at the refinery have totaled $1.3 billion in the past three years alone and were projected to continue. These losses have been caused primarily by weakness in demand for refined petroleum products due to the global economic slowdown and the addition of new refining capacity in emerging markets. In the past three years, these factors have caused the closure of approximately 18 refineries in the United States and Europe with capacity totaling more than 2 million barrels of oil per day. In addition, the low price of natural gas in the United States has put our oil-fueled refinery at a competitive disadvantage.

We deeply regret the closure of the refinery and the impact on each of our people. We explored all available options to avoid this outcome, but severe financial losses left us with no other choice. We will work closely with the government of the U.S. Virgin Islands to ease the transition for our employees and the rest of the community.

After formal shutdown of the refinery, which will occur by the middle of February, most people will continue working through a transition period over a number of months. Thereafter, approximately 100 people will remain to work at the oil storage terminal.

We are committed to providing as much information as we possibly can for each employee. Senior managers will hold meetings by shift and be available throughout the coming days to answer your questions, and information has been mailed to homes. We will also update the [Intranet] with information as it becomes available.

We are extremely sad to share this news. We thank each of our employees for their dedication to HOVENSA, and we are committed to doing everything in our power to ease the transition for all concerned.

Sincerely,
Brian Lever

Devistating. Thoughts go out to all those affected employees and all of those in support businesses.

And where is WAPA going to get thier fuel from now? Spike in LEAC comming too?

Devistating. Thoughts go out to all those affected employees and all of those in support businesses.

And where is WAPA going to get thier fuel from now? Spike in LEAC comming too?

A word of advice, fill your vehicles up NOW. HOVENSA won't be able to deliver fuel much past this week, so stations are going to go dry or spike up to 8-10 bucks a gallon.

HOVENSA L.L.C. announced today that it will commence shutdown of its refinery on St. Croix, U.S. Virgin Islands. Following the shutdown, the complex will operate as an oil storage terminal.

Losses at the HOVENSA refinery have totaled $1.3 billion in the past three years alone and were projected to continue. These losses have been caused primarily by weakness in demand for refined petroleum products due to the global economic slowdown and the addition of new refining capacity in emerging markets. In the past three years, these factors have caused the closure of approximately 18 refineries in the United States and Europe with capacity totaling more than 2 million barrels of oil per day. In addition, the low price of natural gas in the United States has put HOVENSA, an oil-fueled refinery, at a competitive
disadvantage.

“We deeply regret the closure of the HOVENSA refinery and the impact on our dedicated people,” said Brian K. Lever, President and Chief Operating Officer of HOVENSA. “We explored all available options to avoid this outcome, but severe financial losses left us with no other choice. We will provide significantly enhanced benefits for those union and salaried employees who are impacted and will work closely with the government of the U.S. Virgin Islands to ease the transition for the rest of the community.”

After formal shutdown of the refinery, which will occur by the middle of February, most of those employed at HOVENSA will continue working through a transition period. Thereafter, approximately 100 people will remain to work at the oil storage terminal.

from Newsline 340

Wow, very disturbing news.

Must be careful. 1800 people losing their livelyhood is a STAGGERING blow. Remember that "joint ventures" like this have sold before (Texaco Port Arthur)- closed for 30-60 days then reopened under a different name.

Union Contracts voided. Business Plans changed. I think CITGO will be in here sooner than we think- under less than favorable terms. Just as long as we get cheaper oil for WAPA. Probably not- PDVSA has traditionally RAISED prices when they lease other Caribbean Refineries- Curacao...others....

We need to exercise extreme caution to INSURE that we get a favorable deal,

DaChief:

Favorabel deal? What favorable deal?

Per John Hess:

The "entire fuel cost versus the Gulf Coast refinery that has the advantage of natural gases at feedstock"

Do you not understand? The cost of producing power to refine the oil is not competitive here in St. Croix. The refinery generates its own power and it is oil based generation. When oil prices go up, we are NOT cost competitive to refine here. In order to change this... someone would have to make a significant capital investment to change the cost structure of refining here - i.e. natural gas at the feedstock. I have no idea how much that would cost, but obviously Hovensa is not willing to make that investment. Likely they ran the numbers and it is not worthwhile from a financial standpoint to do so.

There is overcapacity in the refining industry worldwide due to expansion of facilities in emerging markets. So are you suggesting that we have such a gem here (1.3Billion in losses in three years) that someone will come in and buy it)? I think you are sorely mistaken

Again. My sources have stated CITGO is purchasing the refinery. PDVSA sells their end to their US Arm- Citgo. Hess sells their end to CITGO.

HOVENSA closes. All Union, WAPA, VIG, Legislative Deals are voided. WITHIN 90 DAYS, Citgo reopens it.This has happened before in Texas. 1/10 of Venezuela's oil production comes here A DAY (350,000 x 121 = $42,350,000). Do you think that Venezuela will effectively end 1/10 of their GNP?

Face the facts- we must start better negotiations, not like our previous Caribbean neighbors who got the short end of the deal "when the new company took over"....

DaChief - I pray you are right. I guess only time will tell.

Correction- After 90 days- as stated by VI Code 24 regarding plant closings...They'll reopen under CITGO or some other name before 120 days...

So sad. Hopefully a buyer will now emerge.

Must be careful. 1800 people losing their livelyhood is a STAGGERING blow. Remember that "joint ventures" like this have sold before (Texaco Port Arthur)- closed for 30-60 days then reopened under a different name.

Union Contracts voided. Business Plans changed. I think CITGO will be in here sooner than we think- under less than favorable terms. Just as long as we get cheaper oil for WAPA. Probably not- PDVSA has traditionally RAISED prices when they lease other Caribbean Refineries- Curacao...others....

We need to exercise extreme caution to INSURE that we get a favorable deal,

Given the current state of affairs, is the territory in any position to "negotiate"? This isn't like buying a used car. Any outfit purchasing/leasing the facility must shell out a hefty capital investment before even setting foot on in the USVI. Who would do that with a predicted negative ROI?

I thought Hovensa and Citgo are one in the same. No? Both owned by Chavez. I very well could be wrong. Very sad news for STX. Where do you find 1900 jobs? Bad.