Limetree Bay Refining plans to restart a former Hovensa plant in St. Croix, U.S. Virgin Islands, at the end of 2019. The refinery’s initial processing capacity of 200 Mb/d represents a significant addition to the North American stack, helping to replace the loss this year of the 335-Mb/d Philadelphia Energy Solutions plant in Pennsylvania. If it opens on time before the year’s end, Limetree will be well-positioned to fill a void in Caribbean refining that’s been left by Venezuela’s collapse as well as the International Maritime Organization’s (IMO) 2020 changes to the bunker fuel market. The plant’s location in the middle of world trade routes conveys some advantage, but it must compete with U.S. Gulf Coast refineries to supply regional markets. While higher input costs compared to U.S. rivals will dampen margins, a tolling agreement with BP could insulate Limetree from market exposure. Today, in the first of a two-part blog series, we review the operations and potential product market for the refinery.
This blog is based on research from Morningstar Commodities and Energy. Click here for a copy.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
A year ago in Meltdown, we detailed new investment proposals for Caribbean storage and refining that might fill Venezuelan national oil company PDVSA’s shoes in the Caribbean, since that country’s political and economic unraveling. The most advanced of those proposals — the Limetree Bay refinery — is currently set to commence operations at the end of 2019. Limetree Bay is located on St. Croix, one of the U.S. Virgin Islands, and was historically operated as a joint-venture refinery by Hess Oil and PDVSA (Hovensa) until its closure in 2012 after three years of losses. At its peak, the plant processed up to 650 Mb/d, making it the largest refinery in the Americas, but it was only running 350 Mb/d when it shut. In December 2015, the refinery was sold to Limetree Bay Ventures, owned by a consortium consisting of ArcLight Capital Partners (79%), a syndicate of other investors (14%) and Freepoint Commodities (7%).
Limetree Bay’s initial commitment was to operate the site as a storage terminal (Figure 1) and review the potential for reopening the refinery. The terminal executed a 10-year agreement for 10 MMbbl of storage capacity with China Petroleum and Chemical Corp., or Sinopec, in 2016. A second storage contract for 3 MMbbl of capacity was also signed with part-owner Freepoint. The terminal currently has 74 tanks with over 20 MMbbl storage capacity, including 8 MMbbl crude and 12 MMbbl refined products, according to a 2017 company presentation. Ten petroleum loading docks can handle vessels up to Suezmax size (55-foot draft).
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About the song
"Welcome to the Jungle" was written by Guns N' Roses, and was the first cut and second single from the band’s 1987 debut album, Appetite for Destruction. The video that accompanied the song caused controversy when initially submitted to MTV, but due to popular demand by viewers quickly went into regular rotation. The single was released in October 1987 and went to #7 on the Billboard Hot 100 chart. In 2009, VH1 named it "the greatest hard rock song of all time."
Appetite for Destruction was recorded between January and June 1987 at four southern California locales: Rumbo Studios in Canoga Park, Take One Studio in Burbank, The Record Plant in Los Angeles, and Can Am Studio in Tarzana, with Mike Clink producing. It was released in July 1987 and went to #1 on the Billboard Top 200 Albums chart. It has been certified 18x Platinum by the Recording Industry Association of America. The original artwork for the album cover, and the inspiration for the title of the record, came from Los Angeles artist Robert Williams, and his painting, “Appetite for Destruction.” Personnel on the record were: W. Axl Rose (lead vocals), Slash (lead guitar, backing vocals), Duff McKagan (bass, backing vocals), Izzy Stradlin (rhythm guitar, backing vocals) and Steven Adler (drums, percussion).
Guns N' Roses is an American hard rock band formed in Los Angeles in 1985. They have made six studio albums, one live album, two compilation albums and 19 singles. They have sold over 100 million records worldwide. The band has won five American Music Awards, four MTV Video Music Awards, and was inducted into the Rock and Roll Hall of Fame in 2012. Although the group has not recorded or released any new material for over a decade, Guns N' Roses still tours with original members Rose, Slash and McKagan, accompanied by touring musicians, playing songs mainly from their early releases. They are currently on the road in the U.S. supporting their extended “Not In This Lifetime Tour” through November of this year.
