PBF Energy shifts to gasoline

OREANDA-NEWS. April 29, 2016. PBF Energy was adjusting operations to boost gasoline production and cut distillates as it heads into a mixed summer demand season.

The company was bullish on octane and gasoline demand, and said imports of the fuel will balance against US Gulf coast shippers to the New York Harbor, rather than east coast refiners.

But the diesel outlook remained poor, and the US independent refiner joined the rest of the industry looking for ways to minimize production of diesel amid record stockpiles of the fuel.

PBF was adjusting crude towers and the mix of product fed to fluid catalytic cracking (FCC) units to boost gasoline. The company can swing roughly 50,000 b/d of production between gasoline and distillates, chief executive Tom Nimbley said during a conference call to discuss first quarter earnings.

Poor operations slashed PBF Energy profits for the first quarter, as refinery malfunctions and accelerated maintenance removed the company's key advantage on the east coast. The refiner operates the region's only coking units, which under normal conditions allow PBF to run heavy and sour crude instead of the more expensive light, sweet feedstock demanded by local rivals.

Higher prices for syncrude, a key feedstock for its 170,000 b/d Toledo, Ohio, refinery, and massive gasoline and diesel inventories in the midcontinent cut margins at that refinery during the quarter. PBF has begun railing some Bakken crude production to Toledo, but remains dependent on syncrude at the refinery, Nimbley said. Prices for syncrude have climbed as eastern Canadian refiners draw supply through the newly reversed 300,000 b/d Line 9 pipeline.

The company's newly acquired 190,000 b/d refinery in Chalmette, Louisiana, was profitable in spite of first quarter maintenance and some ongoing refinery reconfiguration. PBF still plans to close its acquisition of the 155,000 b/d refinery in Torrance, California, by the end of June.

The US independent refiner said it would maintain a balance sheet capable of further purchases in the second half of the year if opportunities arose. Oil major interest in downstream divestment will continue amid pressure to shore up balance sheets against low crude prices, Nimbley said. But Saudi Aramco's interest as a standalone refining company in the US Gulf coast could complicate the market, he said.

"The short answer is if we have an attractive opportunity that shows up in the second half of the year, we would feel comfortable pursuing it," Nimbley said.

PBF expects to run its east coast system at 335,000-355,000 b/d; its Toledo refinery at 155,000-165,000 b/d; and its Chalmette refinery at 175,000-185,000 b/d.

PBF Energy reported a \\$29.3mn loss for the first quarter, down from an \\$87.3mn profit in the same quarter last year.