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Limetree Bay refinery could resume with minimal investment

The idled Limetree Bay oil refinery could resume operations with “minimal capital” and could “easily” be transformed to produce biofuels, the investment banker hired to attract investors said in a marketing document.

The St. Croix, U.S. Virgin Islands, refinery filed for bankruptcy in July after investors poured $4.1 billion into an unsuccessful revival of the aging facility. U.S. regulators halted processing after residents complained of foul odors, oil that was sprayed on nearby homes and contaminated drinking water supplies.

Jefferies Financial Group Inc, which was hired to find a buyer, said in its marketing pitch that “zero facility investment” is required for a restart. It also said the refinery had been fully operational since January 2021 and has “strong government support” at territorial and municipal levels.

It made no mention of the U.S. Environmental Protection Agency order shutting down the plant or requirements to install air monitoring systems before a restart. U.S. prosecutors also are investigating potential criminal violations of the Clean Air Act, a Limetree attorney said during a bankruptcy hearing in early August.

Jefferies did not respond to a request for comment.

In a radio interview on the local national public radio affiliate in mid-August, Limetree Chief Executive Officer Jeff Rinker said that apart from one unit - the coker - that caused the rotten egg odors and spray, the facility was fully operational prior to the shutdown.

Rinker said Limetree implemented all recommendations made by the company that designed the coker, which converts a type of crude oil from other units into motor fuel feedstocks. A buyer would have to invest further to satisfy recommendations made by an independent auditor, Rinker said.

“I’m hopeful that an investor will come in and want to restart the refinery,” said Rinker, chief executive of Limetree since November 2020.

The 210,000 barrel per day refinery is due to receive up to $25 million in interim financing while its private-equity and other owners seek to restructure nearly $2 billion in debt.

The plant’s “hydrotreater units (are) easily converted for renewable diesel production,” Jefferies said. U.S. refiners can take advantage of state and federal incentives to produce renewable fuels.

Rinker said that the USVI governor and Department of Planning and Natural Resources would support any restart, but investors were spooked by uncertainty over required EPA approvals.

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