Hovensa Petroleum Refinery To Pay $5.3 Million Fine, Invest $700 Million In Pollution Controls

The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced today that Hovensa LLC — a joint venture between Hess Corporation and Petroleos de Venezuela, S.A. — will pay a civil penalty of more than $5.3 million, and spend more than $700 million in new pollution controls as part of a settlement resulting from a complaint about Clean Air Act violations by the company at its St. Croix, U.S. Virgin Islands refinery.

According to the government-filed complaint, Hovensa made changes to its petroleum refinery that increased its emissions, after having failed to obtain pre-construction permits, and failing to install required pollution control equipment there.

The proposed settlement requires the company to spend $700 million on upgrading its refinery business with: new and upgraded pollution controls, more stringent emission limits, and aggressive monitoring, leak-detection and repair practices to reduce emissions from refinery equipment and process units. The settlement is subject to a 30-day public comment period and court approval.

Once fully implemented, the EPA statement says:

“Pollution controls required by the settlement are estimated to reduce emissions of nitrogen oxides (NOx) by more than 5,000 tons per year and sulfur dioxide (SO2) by nearly 3,500 tons per year. The settlement will also result in additional reductions of volatile organic compounds, particulate matter, carbon monoxide and other pollutants that affect air quality. Additional pollution-reducing projects at the refinery’s coking unit under the settlement will also reduce greenhouse gas emissions by over 6,100 tons per year.

High concentrations of SO2 and NOx, two key pollutants emitted from refineries, can have adverse impacts on human health, and are significant contributors to acid rain, smog, and haze.”

The government’s settlement with Hovensa is the 28th under an EPA initiative to improve compliance among petroleum refiners, and reduce significant amounts of air pollution from refineries in the U.S. that has been ongoing since 2000, and has impacted 105 refineries operating in 32 states and territories – more than 90 percent of the total refining capacity in the United States.

As a result of the total of settlement agreements in the past eleven years, the EPA reports, refiners have agreed to invest about $6 billion in new pollution controls designed to reduce emissions of sulfur dioxide, nitrogen dioxide and other pollutants by over 360,000 tons per year.

According to a report earlier this month in the Virgin Islands Daily News, Hovensa raised its wholesale gasoline prices (or “rack rate”) across the board for the fourth month in a row in January, bringing wholesale rates to their highest level since October 2008, leading to a spike in retail prices for gasoline across the territory, and beyond. U.S. retail gasoline prices have been climbing steadily since September 2010, according to data compiled by the U.S. Energy Information Administration.

How much do you think the cost of compliance contributes to those rates?