PBF Energy cuts third quarter throughputs

OREANDA-NEWS. August 01, 2016. PBF Energy will reduce crude throughputs by 10-15pc across its US refining system this quarter to manage swollen product inventories, the company said today.

The US independent refiner plans the reductions at its US Atlantic coast and Gulf coast facilities, based on third quarter throughputs estimates published today. Atlantic coast processing would be partially affected by a fluid catalytic cracking (FCC) turnaround planned to begin in late September.

It made little sense to run refineries at maximum rates only to put production into storage, chief executive Tom Nimbley said today in an earnings conference call. US gasoline inventories last week were 214.5mn bl, or 11pc higher than the ten-year average for the week, and total distillates inventories were 8pc higher than average at 152mn bl according to the Energy Information Administration.

"Refinery utilization rates have been bolstering third quarter levels despite the best efforts of the driving public to travel more miles by road than ever," Nimbley said. "The bottom line is there's too much clean product, and the only way you can solve that problem is to reduce the clean product that you make."

Refiners had counted on a strong summer driving season to support strong runs and profits through the second quarter. But high throughputs and an early switch last winter to gasoline production from low-earning distillates smothered that potential, refining executives have said this week.

The conditions will push back upstream as more refiners choose to throttle back instead of continuing to fill storage tanks and hope for better prices, Nimbley warned.

"Incremental economics is the bane of the refiner's existence and may in fact become the bane of the producer's existence," he said.

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