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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with PBF Energy Incorporated (NYSE:PBF) (Parsippany, New Jersey) on Wednesday discussed their decision to idle several units at the Paulsboro Refinery in New Jersey in response to low fuel demand. That talk led to what future Petroleum Refining shutdowns may be necessary in North America for the industry to balance supply and demand in a COVID-driven market.
Industrial Info's database includes profiles on 20 PBF facilities in the U.S. Click here for a list.
Industrial Info also is tracking more than $700 million in PBF project activity.
Click on the image at right for a graph showing PBF project activity by state.
The closures at the 165,000-barrel-per-day (BBL/d) Paulsboro Refinery are part of what PBF said is a reconfiguration of its East Coast refining system, which also includes its 190,000-BBL/d Delaware City Refinery in Delaware. To be completed by the end of this year, the action effectively removes 85,000 BBL/d of refining capacity, executives said during the company's third-quarter earnings conference call with industry analysts.
The Paulsboro Refinery will idle the following: the smaller of its two crude units, the coker, fluid catalytic cracker and several smaller units. Lubes and asphalt units will remain in operation, but PBF will lay off an estimated 250 refinery employees.
The action will result in annual savings of $150 million in operational and capital expenditure costs, according to the company.
Together with the Delaware City Refinery, located 30 miles from the Paulsboro Refinery, throughput capacity is expected to be about 260,000 BBL/d, depending on market conditions, the company said.
"What we set up is a smaller footprint, clearly, (an) 80,000-barrels-a-day equivalent refinery (at Paulsboro)," said PBF Chief Executive Officer Tom Nimbley during the earnings conference call. "But it is a refinery complex that has lubes production capability (and) asphalt, which has been a high-margin product, and probably will be in the future.... Delaware produces chemicals and has the strongest fuels capability of the two refineries because of hydrotreating, hydroprocessing and hydrocracking. So it was the obvious first step for us to go."
The cost-cutting measures are the result of a plunge in gasoline demand due to less travel caused by COVID-19 lockdowns. In the U.S., gasoline demand as of the week ended October 25 was 8.5 million barrels a day, down 10% from a year earlier, according to the U.S. Energy Information Administration (EIA).
PBF's refineries ran at just 70% capacity during the just-ended third quarter, and the company already has made more than 25 major initiatives to cut costs this year, said President Matthew Lucey.
Nimbley said he expects gasoline demand to remain depressed until there is a widely available medical solution for COVID-19.
The North American refining industry still needs to idle more capacity to adjust to the new market environment, Nimbley added. A number of refineries have closed down or reduced their operations, but more than a million barrels per day of throughput still needs to be taken down, he estimated. There could be rationalization of capacity even among the smaller refineries along the Gulf Coast, he said.
In order to cut costs, PBF also plans to conduct no turnarounds at its six refineries during the first half of 2021, and only minor turnarounds in the second half of the year.
Nimbley said PBF will continue to look at ways to reduce expenses, such as achieving more cost synergies at its 155,000-BBL/d Torrance and 157,000-BBL/d Martinez refineries in California.
"Nothing is off the table; everything is under the microscope," Nimbley added.
PBF's revised capital expenditure guidance for 2020 is $360 million. That amount is likely to be far less for 2021.
One of PBF's more substantial planned projects is the upgrade or replacement of a 25,000-BBL/d hydrofluoric alkylation unit at the Torrance Refinery in order to meet California's environmental requirements. Kickoff is planned for early 2022. For more information, see Industrial Info's project report.
PBF reported its third-quarter 2020 results swung to a $417.2 million net loss attributable to stockholders from a $69.5 million profit in third-quarter 2019.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Industrial Info's database includes profiles on 20 PBF facilities in the U.S. Click here for a list.
Industrial Info also is tracking more than $700 million in PBF project activity.
The closures at the 165,000-barrel-per-day (BBL/d) Paulsboro Refinery are part of what PBF said is a reconfiguration of its East Coast refining system, which also includes its 190,000-BBL/d Delaware City Refinery in Delaware. To be completed by the end of this year, the action effectively removes 85,000 BBL/d of refining capacity, executives said during the company's third-quarter earnings conference call with industry analysts.
The Paulsboro Refinery will idle the following: the smaller of its two crude units, the coker, fluid catalytic cracker and several smaller units. Lubes and asphalt units will remain in operation, but PBF will lay off an estimated 250 refinery employees.
The action will result in annual savings of $150 million in operational and capital expenditure costs, according to the company.
Together with the Delaware City Refinery, located 30 miles from the Paulsboro Refinery, throughput capacity is expected to be about 260,000 BBL/d, depending on market conditions, the company said.
"What we set up is a smaller footprint, clearly, (an) 80,000-barrels-a-day equivalent refinery (at Paulsboro)," said PBF Chief Executive Officer Tom Nimbley during the earnings conference call. "But it is a refinery complex that has lubes production capability (and) asphalt, which has been a high-margin product, and probably will be in the future.... Delaware produces chemicals and has the strongest fuels capability of the two refineries because of hydrotreating, hydroprocessing and hydrocracking. So it was the obvious first step for us to go."
The cost-cutting measures are the result of a plunge in gasoline demand due to less travel caused by COVID-19 lockdowns. In the U.S., gasoline demand as of the week ended October 25 was 8.5 million barrels a day, down 10% from a year earlier, according to the U.S. Energy Information Administration (EIA).
PBF's refineries ran at just 70% capacity during the just-ended third quarter, and the company already has made more than 25 major initiatives to cut costs this year, said President Matthew Lucey.
Nimbley said he expects gasoline demand to remain depressed until there is a widely available medical solution for COVID-19.
The North American refining industry still needs to idle more capacity to adjust to the new market environment, Nimbley added. A number of refineries have closed down or reduced their operations, but more than a million barrels per day of throughput still needs to be taken down, he estimated. There could be rationalization of capacity even among the smaller refineries along the Gulf Coast, he said.
In order to cut costs, PBF also plans to conduct no turnarounds at its six refineries during the first half of 2021, and only minor turnarounds in the second half of the year.
Nimbley said PBF will continue to look at ways to reduce expenses, such as achieving more cost synergies at its 155,000-BBL/d Torrance and 157,000-BBL/d Martinez refineries in California.
"Nothing is off the table; everything is under the microscope," Nimbley added.
PBF's revised capital expenditure guidance for 2020 is $360 million. That amount is likely to be far less for 2021.
One of PBF's more substantial planned projects is the upgrade or replacement of a 25,000-BBL/d hydrofluoric alkylation unit at the Torrance Refinery in order to meet California's environmental requirements. Kickoff is planned for early 2022. For more information, see Industrial Info's project report.
PBF reported its third-quarter 2020 results swung to a $417.2 million net loss attributable to stockholders from a $69.5 million profit in third-quarter 2019.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
