PBF Sees Smooth Sailing in Third Quarter After Heavy Turnarounds

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Researched by Industrial Info Resources (Sugar Land, Texas)--With the bulk of planned turnaround work behind it for the year, PBF Energy Incorporated (NYDE:PBF) (Parsippany, New Jersey) saw all five of its refineries operating for almost all of an entire quarter for the first time since its latest two acquisitions, the company reported recently. Industrial Info is tracking more than $400 million in active PBF capital and maintenance projects.

The company achieved net income of $347.2 million for third-quarter 2017, compared with $56.4 million in third-quarter 2016.

"Our results reflect the strong operations of our entire system," said Chief Executive Officer Tom Nimbley in the company's November 2 earnings release. "For the first time since acquiring the Chalmette [Louisiana] and Torrance [California] refineries, we had all five of our assets operating for almost an entire quarter.

PBF owns and operates five refineries in the U.S., including those in Louisiana, California, Delaware, New Jersey and Ohio.

Capital expenditures for the just-ended quarter were $181 million, including $165 million for PBF's Refining segment and $15 million for its logistics operations. In comparison, third-quarter 2016 capital expenditures were $1.09 billion, which included $971.9 million related to the acquisition of the Torrance refinery and related logistics assets.

For full-year 2017, the company expects capital expenditures to be about $600 million for refining and $120 million for logistics.

During the just-ended quarter, the 189,000-barrel-per-day (BBL/d) Chalmette refinery "achieved the highest throughput we have seen, and their operating costs continue to trend down as we expected," Nimbley said during PBF's earnings conference call presentation.

The 155,000-BBL/d Torrance refinery also has met expectations following its summer turnaround, Nimbley said, adding: "The refinery achieved record throughput rates in August and September, and we expect that trend to continue. We have been working diligently at Torrance to improve the facility, increase reliability and develop the workforce."

The cost of the turnaround work figured prominently in PBF's second-quarter earnings results, when the company reported a net loss of $109.7 million. For related information, see August 23, 2017, article - PBF Completes Major Refinery Turnarounds for This Year.

Looking forward, Nimbley said he expects the Torrance refinery to have a light turnaround year in 2018.

Also, the Chalmette refinery is expected to ramp up distillate and gasoline exports, Nimbley said. In addition, the recent mechanical completion of a $29 million crude oil storage tank adds 450,000 barrels of storage capacity to the site. The new storage helps solve a problem that occurred when oil from crude tanker ships filled up the limited storage capacity at the site, forcing the tankers to back off and wait for the refinery to pull down from the storage tanks so the ships could then complete their delivery.

The company will pay an expected $350 million this year for renewable fuel credits. Under the federal renewable fuel system quota system, refiners must either produce a required amount of biofuel or buy Renewable Identification Numbers (RINs). But Chief Financial Officer C. Eric Young said that amount could increase if the Environmental Protection Agency (EPA) "continues to side with the ethanol lobby in their November announcements regarding the 2018 obligations."

RIN expenses are a sore point for PBF executives, with Nimbley saying the EPA and the Trump administration have "caved in to the high-pressure tactics of the corn lobby (...) aimed at maintaining the status quo and sustaining policies that are harmful toward the American workers and consumers."

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