PBF buys ExxonMobil Torrance refinery
OREANDA-NEWS. October 01, 2015. US independent refiner PBF Energy will purchase ExxonMobil's 155,000 b/d refinery in Torrance, California, stretching the small independent to all coasts in its second acquisition this year.
PBF expects to close the \\$537.5mn purchase in the second quarter of 2016. The transaction marks the second PBF refining acquisition this month, both of ExxonMobil refineries.
"Upon completion of these two pending transactions, we will have operations spanning four (regions) and have diversified and increased our commercial footprint and flexibility," PBF chief executive Tom Nimbley said in a statement.
The sale of a major California gasoline supplier comes in the seventh month of a protracted shutdown following a February explosion on pollution control equipment at the site. ExxonMobil has not been allowed to operate a fluid catalytic cracking (FCC) unit before meeting certain safety requirements and making repairs.
The refiner recently proposed restarting the unit in a limited fashion, but approval for the plan fell apart as regulators and the company could not reach terms on controlling associated emissions.
California refiners had long rued their position in a state that vowed to cut consumption of their products by half over the next 15 years. Safety and environmental concerns stymied efforts to tap Bakken and other discounted North American production for the state at their peak. Alon idled its 150,000 b/d of southern California refining capacity in 2012, citing uneconomic conditions. Former Valero chief executive Bill Klesse as recently as 2013 was open to leaving the state, where the US independent refiner operates 305,000 b/d of capacity.
But such talk cooled under current Valero chief executive Joe Gorder, and California refiners managing to operate this year have posted much higher profits as Torrance and other facilities struggled. Supply shortages amid rising demand drove Carbob gasoline premiums to a two-year high in July, capping a series of price spikes throughout the spring and summer.
"We like the west coast this quarter," Phillips 66 chief executive Greg Garland said in August. "But, fundamentally, our long-term view of the west coast hasn't changed. We think it's a really changed place to do business."
The state remains the single-largest US gasoline market, averaging 11pc of national gasoline demand in 2014, according to the Energy Information Administration. Demand increased by 4.3pc through the first six months of this year, according to the EIA.
PBF was bullish throughout. Chairman Tom O'Malley said the US independent refiner saw opportunity in the state last year, under more traditional, tougher conditions. The price spikes had cooled refiner interest in selling, he lamented in August.
"We've had a strong appetite to buy," O'Malley said.