PBF closes in on swift expansion

OREANDA-NEWS. November 02, 2015.  PBF Energy expects to enter the US Gulf coast refining market next week but its west coast debut may not close before April, the company said today.

PBF Energy plans to close on 1 November its purchase of a 189,000 b/d refinery in Chalmette, Louisiana, from current joint venture owners ExxonMobil and PdV. A second acquisition, of ExxonMobil's 155,000 b/d refinery in Torrance, California, may not come before 1 April, the company said on its earnings call today, as ExxonMobil has extensive repairs to complete before the deal will be finalized.

The combined deals will spread PBF to every US refining region except the Rocky mountains and catapult the company into the fourth largest independent refiner.

PBF will want to see at least 15 days of stable operations from a repaired Torrance refinery before closing on that refinery.

"PBF will not close on Torrance if we have any doubt on the refinery's operational status," chief executive Tom Nimbley said.

Torrance's fluid catalytic cracking (FCC) unit has remained shut since February following an explosion on pollution control equipment associated with the unit. The loss of gasoline production from a major southern California source of the fuel roiled west coast markets and has boosted the quarterly fortunes of refiners such as Tesoro and Valero who continued operating there during the quarter.

ExxonMobil considered but apparently abandoned a limited restart of the FCC, instead choosing to target 16 February for a restart. The refinery has also drawn local scrutiny for a hydrofluoric acid leak from a truck transferring the toxic material to a vessel at the facility, and for an accident in a coker last week that released a dark cloud the company says was mostly steam.

But PBF was confident in the quality of ExxonMobil's repair. Other problems over the last two years at the refinery, including trouble with an alkylation unit and with the FCC, meant that those units had received the proper investment and attention, PBF executive chairman Tom O'Malley said.

"It's not like bringing your Ferrari into the local garage that handles Chevrolets," O'Malley said. "They do it the right way."

The Chalmette acquisition was set to move forward as a relatively simple transaction, despite the participation of embattled Venezuelan national oil firm PdV. Energy companies seeking compensation for that country's nationalization of energy assets have in the past complicated other attempted sales, including last year's solicitation of PdV US refining subsidiary Citgo's assets.

PBF Energy anticipated immediate changes to where Chalmette sold products and to the refinery's crude slate, the company said. The refiner saw more opportunity for medium and heavy sours at the refinery once it was no longer operating a crude slate dictated by larger integrated economics. Nimbley did not comment on how products sales would change.

Longer term, an idled hydrocracker, catalytic reformer and small coker could also be restarted to improve operations. The equipment had been kept in good condition, Nimbley said.

"We don't think there's going to be real problems, huge problems, anyway, starting them up if indeed we think they're economic," Nimbley said.