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  Oil Refinery Looms on Virgin Island

By Jeannine Relly
Associated Press Writer
Tuesday, Oct. 5, 1999; 5:36 p.m. EDT

CHRISTIANSTED, U.S. Virgin Islands –– Residents in the U.S. Virgin Island of St. Croix have gotten used to living in the shadow of the Western Hemisphere's largest oil refinery – even if some worry about exposure to occasional chemical odors.

Some first-time visitors are startled to see the giant Hovensa refinery parked on St. Croix, its smokestacks adjacent to coral reefs and wildlife refuges. But residents and environmentalists have come to accept the juxtaposition, and many give the refinery's environmental record high marks.

"The degradation of the wetlands there at Krause Lagoon is already history. We can't reclaim that," says environmental activist Robin Freeman. "Our focus is to make sure that people's health is safeguarded and that the refinery is operating in as clean a manner as possible."

The refinery's history, and very presence here, reflects the broader struggle of many Caribbean islands to employ and sustain people at a time when agricultural staples like sugar cane no longer can.

With 2,000 workers, Hovensa – formerly Hess of the Virgin Islands Corp. (Hovic) – is the Virgin Islands' largest private employer. It accounts for one in eight jobs in St. Croix, population 54,300.

St. Croix welcomed Leon Hess, chief of Amerada Hess Corp., when he proposed in 1965 to build the refinery in the U.S. Virgin Islands' largest mangrove lagoon.

The Virgin Islands' sugar cane industry was near bust and unemployment was 44 percent. Outside government, the few jobs to be had in St. Croix were at a rum distillery, an upstart alumina plant and the nascent tourism business. The local Senate gave Hess a generous 16-year tax holiday.

Since then, the oil refinery on St. Croix – a verdant 84-square-mile (130 square kilometer) island speckled with sugar mills, plantation ruins and Danish architecture – has become the hemisphere's largest, with a refining capacity of 545,000 barrels a day.

"Hess provides more stable employment than the tourist industry, which is seasonal," said Sen. David Jones. "That's important in a micro-state like the Virgin Islands."

The paternalistic Hess, who died May 7, also spent dlrs 45 million on projects ranging from donating landfill property to hurricane repairs for homes and schools.

The refinery has had its share of environmental problems. Since 1982, it has recovered 36 million gallons (136.8 million liters) of petroleum hydrocarbons from groundwater beneath the refinery.

While leaky sewer lines and tanks responsible for the pollution were repaired long ago, the Environmental Protection Agency says 6.4 million gallons (24.3 million liters) remain in the groundwater. The spill doesn't threaten St. Croix's drinking water supply, but could harm coral, sea grass, fish and birds, the EPA says.

In 1992, the EPA said Hovic violated the Clean Air Act for building projects at the refinery without a permit. In 1996, Hovic admitted to illegally shipping more than 300 tons of benzene-tainted waste to an Arizona cement factory. In that case, Amerada Hess Corp. agreed to pay dlrs 5.3 million in fines and restitution.

Hovic lost dlrs 1.2 billion in the 1990s, thanks largely to depressed oil prices. The benefits of locating in the Virgin Islands, which unlike U.S. states can be used by cheaper foreign-owned ships to transport goods to other U.S. ports, couldn't offset the losses.

So in 1998, Amerada Hess sold 50 percent of its Hovic subsidiary to Venezuela's state oil company, Petroleos de Venezuela, S.A., for dlrs 625 million. The company received another dlrs 307 million for the refinery's working capital.

Plans call for a dlrs 500 million coker to convert pitch, the least valuable portion of crude, into higher value products. Venezuela's reserves of heavy crude are the largest in the world.

Construction will employ up to 2,000 – a boost for the Virgin Islands, where two-thirds of high school graduates leave for jobs elsewhere, and the 8.6 percent unemployment rate is more than double the national average.

While the refinery has cut its chemical emissions by half since 1989, some residents in nearby neighborhoods complain that every few months they are exposed to a strong chemical smell.

Clifton Hill activist Sylvia Browne says neighbors' complaints over the years have ranged from skin rashes to burning eyes to nausea.

"Sometimes you wake up in the wee hours of the morning and when you breathe you want to throw up," said Browne.

"We don't know whether it's the landfill, the airport, the animal shelter, the refinery, the alumina or rum plants," says hospital worker Carlos Perez, an activist in the Harvey Community Housing Project.

Hovensa has agreed to help pay for a neighborhood program to monitor air quality, said Lynn Gittens Spencer, an environmental activist.

"We believe it gives residents in these areas some peace of mind," says Hovensa vice president Alex Moorhead, who adds the refinery has a 24-hour chemical response team.

"We'll never say that odors are not coming from the refinery," Moorhead said. But, he added, "We're pretty convinced it's not us."

(jr/ja-dp)

© Copyright 1999 The Associated Press

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