ExxonMobil's Torrance Refinery Sold Amid Report Of Potential Disaster After … | Business News

ExxonMobil’s Torrance Refinery Sold Amid Report Of Potential Disaster After …

1 Oct 2015 | Author: | No comments yet »

Exxon Mobil to sell troubled Southern California refinery.

TORRANCE (CBSLA.com) — A New Jersey-based oil refining company announced Wednesday it is purchasing the ExxonMobil refinery in Torrance that was badly damaged in a February explosion, with the $537.5 million deal expected to close in the second quarter of 2016. LOS ANGELES (AP) — Exxon Mobil Corp. is selling its troubled Southern California refinery for $537 million to a New Jersey energy company more than six months after an explosion crippled the plant and led to higher gas prices in the Golden State, according to an announcement Wednesday.PBF Energy (NYSE:PBF) +8% AH after agreeing to acquire the 155K bbl/day Torrance, Calif., refinery and related logistics assets from Exxon Mobil (NYSE:XOM) for $537M. The deal, subject to “customary closing conditions and regulatory approvals,” will also not be closed until the refinery is “restored to full working order,” according to the buyer, PBF Energy. PBF Energy Inc., one of the largest independent oil refiners in North America, said it will purchase the Torrance plant that can process 155,000 barrels of crude oil a day.

The refinery has been shut down since an explosion in February injured four contractors and caused heavy damage, leading to a shortage of gasoline and higher prices at the pump for drivers in California. Torrance Mayor Patrick Furey, who lives 14 houses from the refinery, said he was concerned he didn’t hear about about the results of review until he saw the CBS News broadcast. Exxon Mobil said in its announcement that it expected the company, which has long admitted having an eye on moving into California, to take control of the refinery by mid-2016.

The Torrance refinery provides 10% of the state’s capacity and 20% of the capacity in Southern California, and the explosion forced XOM to cut production to less than 20%, causing the spike in gas prices. Four workers were injured in the Feb. 18 blast, which led state regulators to issue 19 citations against ExxonMobil and propose penalties totaling $566,600.

Coupled with its previously announced Chalmette acquisition, PBF says it will have increased its refining capacity by more than 60% to ~900K bbl/day and added meaningful Gulf coast and west coast assets to its refining system. Cal/OSHA officials said a 2007 safety review found problems with flammable vapor in the plant’s electrostatic precipitator, but no corrective actions were taken. Tom Kloza, an analyst with the Oil Price Information Service, said the plant reflected a tiny piece of Exxon’s global portfolio and the company had been trying to unload it since 2014. In June, the company announced plans to buy a Louisiana refinery jointly owned by Exxon and Venezuela’s national oil company in a $322 million deal. A preliminary report by the South Coast Air Quality Management District determined the blast was caused by over-pressurization in the electrostatic precipitator – an air-pollution-control system. “We are excited to be adding a refinery with Torrance’s complexity and we look forward to entering the West Coast market,” said PBF CEO Tom Nimbley. “… We are committed to the safe and environmentally responsible operations of the facility and look forward to welcoming Torrance’s well-trained and professional workers to the PBF family.” The 750-acre refinery has a capacity of 155,000 barrels per day.

The sale also includes other storage facilities and pipelines, including a 116-mile section that delivers San Joaquin Valley crude to the refinery and pipes that provide access to the Ports of Long Beach and Los Angeles. The refinery typically provides as much as one-fifth of Southern California’s gasoline supply. (©2015 CBS Local Media, a division of CBS Radio Inc. The 80,000-pound piece of equipment flew 100 feet and landed just a few feet from a tank containing a form of hydrofluoric acid — the gaseous release of which could have injured, or even killed, thousands of people living near the plant. “It could have been much more catastrophic,” U.S.

Chemical Safety Board Chairwoman Vanessa Sutherland told CBS News. “If I were in the community, I absolutely would be concerned.” Exxon Mobil recently stopped working on a plan to restart the refinery using an old ESP with greater emissions, and now the plan is to restore the refinery to its original state, although that work is unlikely to be completed until sometime early next year. Tom O’Malley, the company’s founder and executive chairman, told analysts last year that PBF was looking for buying opportunities in the state. “We are entering at a very attractive purchase price,” he said. Even as most American drivers have enjoyed paying at least $1 a gallon less for gasoline than they did a year ago, California drivers haven’t benefited nearly as much.

While not as severe as the Torrance incident, PBF’s Delaware City refinery had a fire in August that has required it to operate at a reduced capacity.

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