Limetree layoffs as of last night refining part closing ?
The companies that should be running a refinery are very major, highly professional and in almost every case highly profitable. Also, given the laws of supply and demand (demand for petroleum products is both stable and predictable) there will always be a larger better run company willing to buy up an under performing asset of a poorly run competitor. At the moment there is no significant global excess refinery capacity, which is why there are investors eager to capitalize on the mess that is Limetree today. It’s almost impossible to build a new greenfield refinery in the US today, the permitting process alone will take a generation and cost hundreds of millions (if not billions) of dollars, with no guarantee of a return. This is why an existing facility becomes an attractive alternative, it’s both much faster and more cost efficient.
Please don’t confuse my comments as a desire to have a refinery on STX, if none ever existed I would be very opposed to building one, for a wide range of reasons. But given one exists and is a ticking time bomb, in my opinion, if left to sit idle with no ongoing investment. To me it’s a judgment call on which is the lesser of two basic evils (options). I see those options as a regulated private sector going concern or an idle contaminated complex under the ultimate control of the Territorial Government (and I’m thinking WAPA as my benchmark). To me it’s a straight forward choice. I still feel there’s a win-win outcome if a good partner can be located.
I was told by the third-party representative that they "only wanted to get a five-year run out of the equipment".
If this is actually true it’s incredibly stupid (on many levels) as any investment in a refinery restart must be viewed as long term, this is a dramatically capital intensive business so any return on capital will only make sense with a long term view…..20 to 30+ years.
I know what I shared is hearsay. However, I did get exposed to repair plans, and many of my colleagues did not agree with the said repair plans. As I mentioned, I wanted to be no part of this and requested a transfer.
They did spend money on upgrades, and I give them credit for that. The man camp facilities were second to none. However, once the reality of the task at hand with the repairs set in and they needed to spend more money than expected, difficult decisions were taken. As per the code, the owner/user has the final say.
I do have to honor and safeguard the customer information, so I can not share any specifics. However, a restart is typically more troublesome than a new start-up. Many thought restarting the refinery was going to be easy and quick. Nothing farther from the truth... and trying to "get a five-year run" out of the equipment was not realistic. I've worked for several customers, and they make plans for 30 to 50 years or more service life expectancy.
I respect and love STX and the residents, and I sincerely wish them success. I lived and worked there for close to 7 years in total, and I had a blast (no pun intended).
Bankruptcy is just a stepping stone on the path to new ownership and another restart.
Its actually a good thing!
Maybe Wapa should file?
Here's an old article on the bauxite plant.