TEST: PBF closes the deal

OREANDA-NEWS. July 07, 2016. PBF Energy realized its California dream last week, closing a \\$537.5mn purchase of the 155,000 b/d refinery in Torrance, California, and associated assets from ExxonMobil.

PBF's Torrance takeover marks the company's second major acquisition in less than a year, increasing the US independent refiner's capacity by two-thirds and spreading its reach to all US coasts. At 900,000 b/d, the six-year-old company is now the fourth-largest US independent refiner.

California was a white whale for the company, a target pursued by former chief executive Tom O'Malley for at least two years. O'Malley noted the company's executive leadership, drawn in part from the former US refiner Ultramar, had experience operating in California.

"I always warned our team that, when we look at California, we must look at it, to some degree, almost as a different country," O'Malley said in 2014. "It has a different set of requirements, and, certainly, we've lived with them in the past."

The purchase should cheer up the California trading community, which dwindled as trading houses on the west coast shut or consolidated. PBF works as a merchant-based refiner, interested in trading and supply, rather than building integrated retail networks.

But time will tell whether the company instead acquired a white elephant. Problems bedeviled ExxonMobil's restart of the refinery, including a 20 June crane collapse. PBF previously said it expects heavy spending for turnaround work at Torrance in 2017.

And California poses challenges steeper than stable operations. State proposals and local hostility have made for a tough operating environment for refiners. Regulators plan a rising share for renewable diesel in the state transportation pool and regulations that consider the carbon intensity of the crudes refiners choose to run. PBF was able to head west because ExxonMobil was anxious to leave.