hovensa

Good Grief sometimes this board gets tiresome in everyone wanting to prove you wrong. Sean what did I say that was untrue? I said I had not HEARD of any recent layoffs of real hovensa employees I didn't say there were not layoffs.

But basically this thread just sounds like we are all screaming the sky is falling. We have no facts and just rumors. The island past time at its finest.

Hiya, I wasn't trying to "prove you wrong" and should've worded my first sentence a little less "harsh."

It is a fact that they have laid off actual Hovensa workers. I don't want to name specfic names for obvious reasons but I have friends who worked there for over 15 years, lived in Hovensa housing, had their children's education paid for by Hovensa that are now having to move off island because they were told, with only 6 weeks notice that they were being laid off and they had to be out of their house. If you consider this a rumor because its on a message board by someone you don't know in person that's fine, but this is firsthand knowledge from my standpoint so I consider it a fact. I do wish we had better news publications on the island so there was something more concrete I could point to than just what I know firsthand.

As for "screaming the sky is falling" if you read my post I think you'll see that I was far more measured than that (mentioning a gradual decline).

Sean

I Think that in order to run your AC in the Virgin Islands you need electric. Since we don't get our electric from wind power, solar power, and or coal. Where does it come from now and a Looooooooooooooooooooooooooooooong time from now. I would love to hear some visionary ideas as to what would benefit STX as well or better than Hovensa. My family and other families remember what it was like without Hess-Now Hovensa.

Lizard, there are talks about a pipeline from PR to STT for natural gas. From wikipedia:

The Puerto Rico–Virgin Islands pipeline is a proposed offshore natural gas pipeline to connect Puerto Rico and the United States Virgin Islands. The pipeline would start from the Puerto Rican natural gas grid on the island of Culebra and run to Saint Thomas, U.S. Virgin Islands. Gas will be supplied from the EcoEléctrica's regasification plant in Peñuelas, Puerto Rico. Natural gas will be used to replace diesel-generated power with natural gas-fired power.

I don't know what would be done for STX if Hovensa ceased production. Culebra is not as far a reach for STT as something from STT to STX would be. Perhaps, since Hovensa has the docks, they could bring fuel from PR by boat?

I haven't heard of this but the grand irony is that if they could run a natural gas pipeline to STX it would go a long way towards helping Hovensa survive economically (because it would allow Hovensa to use natural gas heaters which is not only cheaper but would help out a lot with environmental permitting issues which are one of the big items driving long-term capital expenses for Hovensa.)

Lizard, there are talks about a pipeline from PR to STT for natural gas. From wikipedia:

The Puerto Rico–Virgin Islands pipeline is a proposed offshore natural gas pipeline to connect Puerto Rico and the United States Virgin Islands. The pipeline would start from the Puerto Rican natural gas grid on the island of Culebra and run to Saint Thomas, U.S. Virgin Islands. Gas will be supplied from the EcoEléctrica's regasification plant in Peñuelas, Puerto Rico. Natural gas will be used to replace diesel-generated power with natural gas-fired power.

I don't know what would be done for STX if Hovensa ceased production. Culebra is not as far a reach for STT as something from STT to STX would be. Perhaps, since Hovensa has the docks, they could bring fuel from PR by boat?

Well said Mr SHDOUG....unfortunately most people do not recognize their own usefullness and personal wealth as part of their dreams and desires. Glad that the AC business is going well...so how about fixing that remote problem that I have!!!!

I still think we should just put a 16 SEER TGM inverter in there and forget about that Miller 10 SEER. But it may slow down soon and then I can take care of it.

if i am remembering correctly, if hess employees get free housing and free education for their youth...they are management, upper or middle same way...not regular employess...don't know how it is now, but that is how it used to be. we had to pay our rent...

stiphy i agree with you. i have heard the same things from reliable sources.

talked to man yest. on island who was sent to control pending strikes etc.

i dont think we are yelling "the sky is falling" but it sure is sagging a bit.

That's essentially right. Hovensa housing is not for contractors as someone else mentioned earlier.

if i am remembering correctly, if hess employees get free housing and free education for their youth...they are management, upper or middle same way...not regular employess...don't know how it is now, but that is how it used to be. we had to pay our rent...

they use to put contractors in hess housing. management that is. during car cracker i know for sure they did.

are those houses full now does anyone know?

if a pipeline was built it would take forever wouldnt it?

i think wind farms should be planted here. (what ever you call it) saw fields of the things in n.y. and they supplied power to mass populated areas.

HOVENSA L.L.C. to Close Some Units and Reduce Crude Oil Distillation Capacity
St. Croix, U.S. Virgin Islands ……January 26, 2011…… HOVENSA L.L.C. (HOVENSA) today announced plans to shut down certain processing units on the west side of its refinery. This action will reduce the refinery’s crude oil distillation capacity from 500,000 barrels per day (BPD) to 350,000 BPD, with no impact on the capacity of its coker or fluid catalytic cracking (FCC) unit. This reconfiguration will be completed in the first quarter of 2011.

The Company is in the process of determining its workforce needs going forward. In the interim, it has placed an immediate hold on filling most open positions and cancelled the 2011 turnarounds previously scheduled for west side units that will be shut down. HOVENSA employees and contractors were notified today of these plans.

HOVENSA Interim Chief Operating Officer John W. George said, “Simplifying our operation by eliminating some older, smaller process units is expected to result in improved efficiency, reliability and competitiveness. This is an important step toward improving our performance at a time when HOVENSA and the refining industry are facing difficult economic conditions.”

HOVENSA is jointly owned by Hess Corporation (NYSE: HES) and Petroleos de Venezuela S.A. (PDVSA).

http://phx.corporate-ir.net/phoenix.zhtml?c=101801&p=irol-newsArticle&ID=1520023&highlight=

i noticed when i drove by hovensa on monday that the parking lots were almost empty. and didnt see as much action at the refinery as usual. things looked almost "ghost" like.

FOR IMMEDIATE RELEASE
January 26, 2011

Nation’s Second Largest Refinery to Pay More Than $5.3 Million Penalty for Clean Air Act Violations

Smog- and asthma-causing emissions to be cut by 8,500 tons per year

WASHINGTON—The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced today that Hovensa LLC, owner of the second largest petroleum refinery in the United States, has agreed to pay a civil penalty of more than $5.3 million and spend more than $700 million in new pollution controls that will help protect public health and resolve Clean Air Act violations at its St. Croix, U.S. Virgin Islands refinery. The settlement requires new and upgraded pollution controls, more stringent emission limits, and aggressive monitoring, leak-detection and repair practices to reduce emissions from refinery equipment and process units.

http://www.epa.gov/compliance/resources/cases/civil/caa/hovensa.html

Workers face uncertain future at HOVENSA

http://www.world247.net/north-america-news/workers-face-uncertain-future-at-hovensa/?utm_source=World247&utm_medium=twitter

interesting article.....thanks

As the price of oil rises, so will the incentive to refurb/rebuild to bring more capacity back online.

I wonder what Mr Chavez thinks of his joint venture with an American Company. Do you think he might have to tighten his belt a little. Sometimes we have to think out of the box to understand what is really going on. China did not come up with the 20 Billion dollars for Chavez to build his own plant.:-o

Doesn't work quite that way I'm afraid. There's supply AND demand and they are tightly but not perfectly correlated. You have to look at the spread between price to produce and price at the pump. As crude prices continue to move up refiners like Hovensa will be squeezed even more until wholesale prices adjust at the rack (and locally I think, not sure, that prices can only move at the end of the month?) Of course how much the retailer jacks up prices from there is related but not tied to the rack price changes (witness the most recent change where retailers raised their pump prices more than the wholesale rack price increase.)

Right now there is excess capacity for less complex refiners and those at the bottom in efficiency will continue to be squeezed until they change their cost structure/product mix or go out of business.

As the price of oil rises, so will the incentive to refurb/rebuild to bring more capacity back online.

HOVENSA cuts 90 Jobs -

http://stcroixsource.com/content/news/local-news/2011/03/10/hovensa-cutting-90-jobs

so, it looks like dixie was correct in this 🙂

uhhh, they haven't shut down the refinery, they fired 7 percent of the work force. And is a smiley face about that really appropriate?

sure speedy didnt mean anything by that....:-X

As the price of oil rises, so will the incentive to refurb/rebuild to bring more capacity back online.

Doesn't work quite that way I'm afraid. There's supply AND demand and they are tightly but not perfectly correlated. You have to look at the spread between price to produce and price at the pump. As crude prices continue to move up refiners like Hovensa will be squeezed even more until wholesale prices adjust at the rack (and locally I think, not sure, that prices can only move at the end of the month?) Of course how much the retailer jacks up prices from there is related but not tied to the rack price changes (witness the most recent change where retailers raised their pump prices more than the wholesale rack price increase.)

Right now there is excess capacity for less complex refiners and those at the bottom in efficiency will continue to be squeezed until they change their cost structure/product mix or go out of business.

The price at the pump doesn't squeeze them for long. It's a waiting game until their customers get used to the new high. We're addicted and they know it.

When the price of oil rises, it doesn't necessarily mean that overnight it took more money to bring it out of the ground, or cost more to refine.

Hovensa is more than just a supply/demand issue. It's about basic manufacturing economics:

If you're pumping oil, you also want to control (entangle) the means of refinement/production.
(A) Own the means of production to ensure an outlet for your product.
(B) Leverage the cost of production against other producers (refineries) --the "we can do it ourselves if we have to" defense.
(C) Insulate yourself from foreign interference. (Washington has to be careful with Hugo otherwise it will cost jobs and raise prices)

All that said, when the U.S. figures out how to truly reduce its dependence on foreign oil, then you'll see Hovensa close. If I were the Pope of the USVI....I'd be working on making the islands energy independent.

What we should really worry about is if it becomes cheaper to ship & refine in China. (Maybe it already is).

Thank you Dixie, no smiley for the laid off workers Hiya. I just like smileys even though i don't use them all the time.

Actually that's not correct. Crude prices (cracks) are commodities and price changes by the minute. Hovensa prices crude and products on a daily basis and estimate their profit or loss based on these daily prices. As a result an overnight spike in crude prices can indeed mean bigger losses for Hovensa.

Regarding China, no worries there. They are trying to buy more than than they can make given their economic growth - the issue with China is they will drive global demand and higher commodity pricing over time. The local threats are from a facility in India and the increases in refining capacity in Brazil (Petrobras.)

I believe Hovensa would be happy to get out from under their contract for heavy crudes from Chavez at this point since the money is in lighter/cleaner (e.g., lower sulfer) crudes. Getting out of the PDVSA relationship would not mean the end of Hovensa but possibly a better future (particularly as Hess would probably find a more stable partner.)

As the price of oil rises, so will the incentive to refurb/rebuild to bring more capacity back online.

...
The price at the pump doesn't squeeze them for long. It's a waiting game until their customers get used to the new high. We're addicted and they know it.

When the price of oil rises, it doesn't necessarily mean that overnight it took more money to bring it out of the ground, or cost more to refine.

Hovensa is more than just a supply/demand issue. It's about basic manufacturing economics:

...

What we should really worry about is if it becomes cheaper to ship & refine in China. (Maybe it already is).

Thanks, GoodToGo, for the explanations. The oil market is really complex.