PBF’s purchase of Exxon Mobil Corp’s Refinery Marks Its Entry in California Market
PBF Energy Inc's purchase of Mobil Corp's California refinery marks Chairman Tom O'Malley's biggest bet on US refining in the country's toughest market. Under the $537.5 million deal PBF will buy Exxon's 55,000 barrels per day plant in Torrance with dock, storage and pipeline infrastructure.
California is isolated without having any good pipeline connections with rest of the country. Therefore, majorly the state is dependent on costlier foreign crude imports as output in California and Alaska is declining putting California refiners at a disadvantage relative to the US peers who can easily tap domestic oil.
O'Malley formed PBF in 2008 to buy US refineries and started with two in Delaware and New Jersey that Valero Energy Corp wanted to shed. Many east coast refiners struggled, and some had shut down, stuck with paying more for imports while peers in the Midwest and Gulf Coast reaped big profits on cheap and accessible shale oil.
But rise of crude-by-rail after his acquisitions let PBF and other surviving East Coast refiners tap that inland bounty and reduce reliance on imports. PBF has opened its checkbook wider for Torrance than it has for any other refinery.
At $537.5 million for the 155,000 barrels per day plant, PBF is paying $34.67 a barrel more than $16.72 a barrel it agreed in June to pay for Exxon's joint-venture 192,500 bpd refinery in Chalmette, Louisiana.
Ryan Eggers, supervisor of the transportation fuels unit at the California Energy Commission said having this sort of market potential is probably something that's enticing to them a lot more than any regulatory barriers.