HOUSTON Oct 1 PBF Energy Inc’s purchase
of Exxon Mobil Corp’s California refinery outlines Chairman
Tom O’Malley’s biggest gamble nonetheless on U.S. enlightening in a country’s
The $537.5 million understanding to buy Exxon’s 155,000 barrels per
day plant in Torrance with dock, storage and pipeline
infrastructure will symbol PBF’s opening into a marketplace in
California, where refiners spend some-more to make a required
boutique gasoline brew and face stronger emissions regulations
than anywhere else in a country.
The state is also removed though good tube connections
to a rest of a country. So it is increasingly contingent on
costlier unfamiliar wanton imports as outlay in California and
Alaska decline, putting California refiners during a disadvantage
relative to U.S. peers who can simply daub domestic oil.
O’Malley, a mythological refiner, shaped PBF in 2008 to buy U.S
refineries and started with dual in Delaware and New Jersey that
Valero Energy Corp wanted to shed. East Coast refiners
struggled, and some close down, stranded with profitable some-more for
imports while peers in a Midwest and Gulf Coast reaped big
profits on inexpensive and permitted shale oil.
But a arise of crude-by-rail after his acquisitions let PBF
and other flourishing East Coast refiners daub that internal bounty
and revoke faith on imports.
California is a distant opposite animal. Besides a costly
mandated gasoline brew and a cap-and-trade complement to cut
emissions, speak of expanding oil-by-rail draws vehement
opposition that grows with each new burning wanton sight crash.
“There is really a lot of pushback in California,” said
John Faulstich of enlightening consultancy Stillwater Associates.
That antithesis spreads north to Vancouver, Washington,
where Tesoro Corp wants to build a 360,000 bpd railport
to bucket railed-in wanton onto vessels to supply West Coast
refineries, especially in California.
But even with those issues, Torrance expected was still
attractive, experts said.
PBF is opening a checkbook wider for Torrance than it has
for any other refinery. At $537.5 million for a 155,000
barrels per day plant, PBF is profitable $34.67 a tub – some-more than
$16.72 a tub it concluded in Jun to compensate for Exxon’s
joint-venture 192,500 bpd refinery in Chalmette, Louisiana.
Tesoro paid $1.18 billion in 2013 for BP Plc’s
266,000 bpd refinery – or $44.36 a tub – though that enclosed a
dock able of doing a biggest oil tankers, storage tanks,
pipelines and sell assets. Associated Torrance resources are
similar, though do not embody retail.
Torrance, when running, “is a gasoline beast,” Credit Suisse
analyst Ed Westlake pronounced in a note to investors. The refinery
provides about one-fifth of Southern California’s gasoline
supply – and 10 percent for a whole state.
“Having that arrange of marketplace intensity is substantially something
that’s interesting them a lot some-more than any regulatory barriers,”
said Ryan Eggers, administrator of a travel fuels section at
the California Energy Commission.
Refining margins have been clever on a West Coast this
year – mostly since Torrance has been out of a mix, hobbled
by a Feb explosion.
Tesoro Corp, for example, pocketed $16.73 in profit
per tub of polished products in a second quarter, adult from
$12.37 per tub in a same duration in 2014.
“If we were handling in California this year and you
weren’t Exxon, we done a ton of money,” Faulstich said.
Exxon aims to repair a apparatus during Torrance, and sources
familiar with a plant contend a association aims to have that work
done by mid-February – a year after a blast.
PBF pronounced a plant would be “restored to full operative order”
by a time a understanding closes in a second entertain 2016.
(Reporting By Kristen Hays; Editing by Terry Wade and Michael