Adds refinery details.
PBF Energy will slash the capacity of its 180,000 b/d refinery in Paulsboro, New Jersey, to balance its Atlantic coast refining system for long-term demand.
The US independent refiner will shut Paulsboro units to bring combined capacity at its two east coast refineries to 260,000 b/d by the end of the year. The move will effectively reduce the company's east coast refining capacity by 85,000 b/d and allow the remaining units at Paulsboro and the 190,000 b/d Delaware City, Delaware, refinery to operate at higher utilization rates, the company said.
Paulsboro will continue to produce lubricants and asphalt, and supply Delaware City with intermediates that PBF currently purchases from third parties. The refiner will shut the smaller of its two crude units, a fluid catalytic cracking (FCC) unit, alkylation unit and a coker.
"Essentially, the east coast will be shedding its least economic crude and its lowest netback products," PBF president Matt Lucey said of the company's refining system.
Atlantic coast challenges
The Atlantic coast is the weakest of the five major US energy regions, averaging margins based on Brent crude of $2.44/bl during the third quarter. PBF's reconfigured operations would have a capacity in line with the roughly 247,000 b/d of crude throughputs that the company's east coast refineries averaged in the second and third quarters. Heavy and medium crudes made up most of those throughputs.
Saudi Arabian medium sour crude dominated Paulsboro's imports in 2019, averaging about 93,000 b/d. The refinery imported about 30,000 b/d of light crudes from Kazakhstan and Russia in the first quarter of this year before cutting throughputs in response to a demand collapse as communities tried to contain the spread of Covid-19.
PBF acquired the Paulsboro and Delaware City refineries roughly a decade ago as US independent refiner Valero exited the east coast. Both refineries can process heavy and sour crudes — a rarity for the region. PBF can continue to rail light sweet and heavy Canadian crude to its Delaware City refinery.
Chief executive Tom Nimbley expected further improvements to the more integrated east coast system as the sites had more experience under the new operations.
"I think it is absolutely the right thing to do, but I think there is upside potential over what we have advertised," he said.
The company could also re-examine integration between its newly acquired 156,000 b/d Martinez and 150,000 Torrance refineries in California, he said.
"Nothing is off the table," Nimbley said. "Everything is going to be looked at and put under a microscope."
PBF's decision brings the volume of US Atlantic coast refining capacity idled this year to at least 415,000 b/d. The new owners that acquired Philadelphia Energy Solutions through bankruptcy chose to dismantle the 330,000 b/d refinery in Philadelphia, Pennsylvania, and convert the site to other industrial uses rather than to restore refining operations.
The 115,000 b/d Come-by-Chance refinery in Newfoundland and Labrador, another New York Harbor supplier, remains idled after a proposed sale to Irving Oil fell through.
