Gasoline demand could last: PBF

OREANDA-NEWS. July 31, 2015. A strong US economy may mean gasoline demand regains its importance to the industry and counters the expected softness in the upcoming fall and winter diesel season, PBF Energy executive chairman Tom O'Malley said today.

The refining industry veteran said distillate was no longer the clear leading product for global refiners, given some of the strongest sustained US gasoline demand since 2007. The US Atlantic coast, where PBF operates the bulk of its refining capacity, has accumulated record ultra-low sulfur distillate (ULSD) inventories over the course of the year.

But strong gasoline demand that has improved US refining margins in 2015 could last longer than some expect, O'Malley said in a conference call to discuss second quarter earnings.

"We have much less expensive gasoline here in the United States as a result of these low crude oil prices, and that's going to continue, I believe, to add to the importance of gasoline, which had somehow faded a little bit," O'Malley said. "Refining margins this morning are excellent."

East coast refining operations led PBF Energy to a stronger second quarter profit despite dismal rail opportunities and untimely maintenance in the midcontinent.

The US independent refiner turned to waterborne barrels — once the reason companies looked to sell or shutter refining in the east coast — as differentials for both Bakken and West Canadian Select crudes could not justify rail costs to their east coast refineries.

"Factoring in transportation costs, it is plainly evident that these barrels can not find an economic home on the east coast or a lot of other places at these differentials experienced in the second quarter," chief executive Tom Nimbley said.

An unplanned 16 days of maintenance on gasoline-producing equipment at PBF's 170,000 b/d refinery in Toledo, Ohio, hit the facility in the midst of strong midcontinent margins. But the facility was operating normally today, the company said.

PBF plans three weeks of maintenance early in the fourth quarter at its 190,000 b/d refinery in Delaware City, Delaware. Throughputs in the third quarter will average 310,000 b/d to 330,000 b/d at the east coast refineries, and the Toledo refinery will average 150,000-160,000 b/d. Full-year throughputs, including the planned maintenance, will average 310,000 b/d to 330,000 b/d at the east coast refineries and 145,000 b/d to 155,000 b/d at Toledo.

PBF reported a second quarter profit of \\$135.8mn, nearly seven times larger than the \\$20.9mn reported in the same quarter of 2014.