ArcLight, Freepoint Officially Take Over Hovensa Oil Terminal
01.11.2016 - NEWS

January 11, 2016 [OPIS] - ArcLight Capital Partners and Freepoint Commodities said that Limetree Bay Terminals (LB Terminals) has completed the purchase of idled HOVENSA storage terminals, refining units and marine infrastructure located at Limetree Bay, St. Croix, U.S. Virgin Islands.


OPIS reported in late December that ArcLight and Freepoint won the final approval from the U.S. Virgin Islands Senate for this transaction. HOVENSA was sold for $190 million during a bankruptcy auction. As part of the operating agreement, ArcLight pledges to invest in the U.S. Virgin Islands, including building schools and an asphalt plant. Also, ArcLight will look at the feasibility of restarting the 500,000-b/d HOVENSA refinery over the next 18 months.

ArcLight, through an affiliate, manages and owns an 80% interest in LB Terminals; Freepoint owns a 20% interest in LB Terminals.

LB Terminals purchased the assets of the St. Croix Facility pursuant to a section 363 process as part of HOVENSA’s bankruptcy case.

Prior to closing, LB Terminals negotiated a new operating agreement with a team representing Kenneth Mapp, governor of the Virgin Islands. The operating agreement authorizes LB Terminals to own, restart and operate the St. Croix facility.

On Dec. 29, 2015, the 31st Legislature of the Virgin Islands voted to ratify the operating agreement, and the Gov. Mapp signed the agreement into law shortly thereafter.

The St. Croix facility consists of approximately 32 million bbl of crude oil and petroleum product storage, idled refinery units with total peak processing capacity of 650,000 b/d, a deepwater port with nine ship docks, six tug boats, and various associated equipment and inventory.

LB Terminals intends to make significant investments to revitalize the St. Croix facility as an environmentally compliant, multi-purpose energy center, with an initial focus on crude oil and refined petroleum product storage operations.

LB Terminals has already executed a 10-year lease agreement for 10 million bbl of storage capacity with China Petroleum & Chemical Corporation (Sinopec) as well as lease agreements with Freepoint covering an additional 3 million bbl of capacity.

LB Terminals plans to bring into service most of the facility’s existing storage capacity and is also actively pursuing the restart of certain of the idled refinery process units at the St. Croix facility.

“ArcLight was attracted by the St. Croix facility’s strategic location at the crossroads of the movement of crude and refined products, the scale and quality of its infrastructure, and its highly skilled workforce,” said Dan Revers, managing partner and co-founder of ArcLight.

ArcLight did not provide a timetable for HOVENSA terminaling restart, but industry sources told OPIS that HOVENSA storage tanks would be brought back to service in batches over the next several months. Prior to the HOVENSA terminal shutdown last year, the terminal had an operational storage capacity of about 13 million bbl. Also, HOVENSA terminal is an ideal storage facility catering to the Caribbean market and South America, based on its location.

ArcLight is a private equity firm focused on North American and Western European energy assets. Since its establishment in 2001, ArcLight has invested over $13.9 billion across multiple energy cycles in more than 90 investments. The company is headquartered in Boston, Mass., with an additional office in Luxembourg.

On Friday, ArcLight had also bought TransMontaigne from NGL Energy Partners for $350 million. In late December, ArcLight bought Gulf Oil.

Founded in 2011, Freepoint is based in Stamford, Conn., with over 280 employees worldwide. Freepoint is a merchant of physical commodities and a financer of upper and midstream commodity-producing assets. Freepoint also provides physical supply services and related structured solutions for counterparties. Private equity funds managed by Stone Point Capital, together with Freepoint management and senior employees, have provided Freepoint with approximately $400 million dollars of committed equity capital.

OPIS reported in late 2015 that Freepoint is ramping up its physical gasoline trading business after hiring some veteran traders. Freepoint is aiming to trade across the barrel in the global physical market.

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