UPDATE 1-PBF Energy buys Torrance refinery in bid for national footprint

1 Oct 2015 | Author: | No comments yet »

Consumer Watchdog Warns Exxon Cannot Avoid Accountability for February Explosion Through Offloading Torrance 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 $527.5 million deal expected to close in the second quarter of 2016.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.SANTA MONICA, Calif., Sept. 30, 2015 /satPRnews.com/ — ExxonMobil’s sale today of its Torrance Refinery may allow it to escape the state, but not culpability for the February 18 explosion or its subsequent coverups over its causes. 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.

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. The acquisition isn’t expected to have any immediate effect on gasoline prices in the Los Angeles area, where consumers have paid as much as $1.50 more a gallon than the rest of the nation because of an explosion at the refinery in February.

That explosion injured four workers and endangered the community, and touched off a price spike that cost Californians $6 billion more for their gasoline than they would have paid otherwise. “If Exxon can’t keep gas flowing to the state and keep our neighborhoods safe, it should turn over the refinery to a company who can.” Consumer Watchdog president Jamie Court said. “But state regulators and investigators must continue to hold Exxon accountable even as it leaves the refining market. 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. 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. PBF Energy, a Fortune 200 company on the New York Stock Exchange, based in Parsippany, N.J., said Torrance will be the smallest in its fleet of three existing refineries and will be the fifth plant in the company’s operations. Exxon can exit the market but it should not be able to hide from the law.” The announcement comes just days after Consumer Watchdog penned a letter to the Governor, California Attorney General, and the US Attorney General alleging a cover-up of key evidence and the concealing of a key witness, demonstrating the companies negligence.

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. 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. 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. 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.

Because of the relatively small number of refineries in California — and few out-of-state refineries produce California’s environmentally friendly blends — any interruption of capacity in the state has an outsized effect on supply and prices. Together, PBF, which has long had its eye on acquiring plants in California, said its two Exxon refinery acquisitions will boost its overall fuel-making capacity by 60%. Standing 12 stories high and weighing more than 1,000 tons, the pollution control system — known as the electrostatic precipitators — reduces ammonia and particulate emissions. The California Occupational Safety and Health Administration shut down the larger unit that houses the affected equipment, citing an imminent hazard until the company demonstrated that it could be safely run. Exxon Mobil recently abandoned the idea of using the old pollution control and an industry analyst said the company had taken all the workers off the project.

Chemical Safety Board.” Jamie Court, president of the advocacy group Consumer Watchdog, said it was good to have a new entrant in California’s energy market, “and I think it’s better to have a smaller player rather than one of the big four.” As for Exxon Mobil, Court said he planned to continue to press for further investigation into the company’s handling of the plant and what led to the February explosion.

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