ExxonMobil's California Refinery Restarting after Long Recovery

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Researched by Industrial Info Resources (Sugar Land, Texas)--The road to recovery has been a long one for Exxon Mobil Corporation's (ExxonMobil) (NYSE:XMO) (Irving, Texas) refinery in Torrance, California. Nearly 15 months after an explosion severely damaged the facility, it is finally in restart mode. And none too soon, as the refinery is expected to change hands this summer.

The 155,000 barrel-per-day refinery, which had supplied California with 10% of its gasoline, according to ExxonMobil, has operated at only 20% capacity since the February 18, 2015, blast damaged the fluid catalytic cracker unit (FCCU) and electrostatic precipitator-a major pollution control device. Industrial Info is tracking two active projects worth $75 million at the refinery, including the $15 million rebuild of the FCCU.

More than 80 years old, the refinery gets most of its crude oil from the San Joaquin Valley via ExxonMobil's M-70 pipeline. The facility covers 750 acres, employs about 650 employees and 550 contractors, and produces 1.8 billion gallons of gasoline per year.

In the aftermath of the blast, California's gasoline prices, already the highest in the nation, spiked even further. State and federal investigations into the cause of the explosion ensued, resulting in numerous citations and proposed penalties. ExxonMobil has spent more than $160 million to repair the refinery, according to news accounts.

In August last year, ExxonMobil proposed refurbishing and using an older electrostatic precipitator at the refinery while more permanent repairs continued, but was unable to reach an agreement with state environmental regulators.

The South Coast Air Quality Management District (SCAQMD) Hearing Board recently green-lit the refinery's restart. ExxonMobil began the start-up of the FCCU early Tuesday. The procedure was estimated to cause higher emissions of particulate matter than usually allowed by the SCAQMD for a six-hour period. As part of the SCAQMD order, refinery throughput will be 100,000 BBL/d during the start-up, which is roughly 25% less than normal operation levels.

Possession of the refinery is scheduled to change this summer. PBF Energy Incorporated (NYSE:PBF) (Parsippany, New Jersey) agreed last year to buy the facility for $537.5 million on the condition it is restored to full working order by ExxonMobil. PBF will also acquire the 171-mile crude gathering and transportation system that delivers San Joaquin Valley crude oil to the refinery. In addition, the deal includes several other pipelines, which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as a direct pipeline supplying jet fuel to the Los Angeles airport. The refinery also has crude and product storage facilities with about 8.6 million barrels of shell capacity. PBF Energy said at the time of the purchase announcement that the refinery facility is strategically positioned in Southern California with advantaged logistics that offers flexible raw material sourcing and product distribution opportunities primarily to the California, Las Vegas and Phoenix area markets. For related information, see October 2, 2015, article - PBF Energy's Refinery Purchase in California Tied to Improved Utilization, Reliability, Says CEO.

PBF has said it plans to improve operations at the refinery, which has had reliability issues in the past. Chief Executive Officer Tom Nimbley said in the company's recent earnings conference call that "everybody understands that Torrance has not run as well as it should have or could have in the last several years."

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