St. Croix refinery cannot restart without new permit, air pollution tech -EPA

© Reuters. FILE PHOTO: Installations of the Limetree Bay petroleum refinery are seen in St Croix, U.S. Virgin Islands June 28, 2017 when they were owned by Hovensa. REUTERS/Alvin Baez

By Laura Sanicola

(Reuters) -U.S. regulators will require a new Clean Air Act permit for a troubled oil refinery in the U.S. Virgin Islands, which could cost its owners hundreds of millions of dollars and take three years or more to obtain, the Environmental Protection Agency said on Thursday.

The idled St. Croix refinery, formerly the largest in the Western Hemisphere, was expected to boost overall supply in the Caribbean, a key transit point for petroleum shipments, but was shut after just a few months of operation.

The EPA shut down the refinery, formerly called Limetree Bay, in May 2021 after a series of chemical releases into the environment sickened neighboring residents.

The refinery was sold for $62 million in December 2021 to West Indies Petroleum and Port Hamilton Refining and Transportation, following the bankruptcy of its former private equity owners.

The plant owners intend to restart the facility, but have let it fall into disrepair, the EPA said last month. The agency cited equipment corrosion that presents risk of fire, explosion or other "catastrophic" releases of hazardous substances.

An August 2022 fire within the petroleum coke conveyor loading system burned for two weeks, prompting the inspection.

The new Prevention of Significant Deterioration (PSD) permit would require detailed air-quality analyses and the use of the best available air pollution control technology, the EPA said Thursday.

A PSD permit limits emissions to levels that would result from the best available air pollution control technology, which the EPA said would likely result in significant reductions of emissions of nitrogen oxides and volatile organic chemicals, and reductions in sulfur dioxide, hydrogen sulfide, carbon monoxide and particulate matter at the facility.

The EPA said the company may choose to install a low NOx burner, sulfur recovery units or scrubbers and carbon monoxide catalysts. The owners could also consider using low sulfur fuel oil and better combustion practices.

The new owners must also negotiate a new consent decree with the U.S. Department of Justice (DOJ) and operate a flare gas recovery system, the agency said in March.

An earlier owner, Hovensa, was required to spend $700 million on pollution control equipment, among other obligations after violating the Clean Air Act by increasing emissions without first obtaining pre-construction permits and installing required pollution control equipment.

Hovensa went bankrupt and shut down the plant the following year; later Limetree Bay Ventures bought the refinery in December 2015.