(Repeats article published earlier, no changes)
By Liz Hampton
HOUSTON, March 29 An aging California refinery
is testing PBF Energy Inc's reputation as a turnaround
whiz, with mounting production woes and costly repairs at the
88-year-old plant throwing a wrench into efforts to quickly
The refinery, acquired from Exxon Mobil Corp for
$537.5 million, has reported frequent breakdowns since the deal
closed last July. On April 1, a regional air-quality regulator
expects to consider the plant's frequent breakdowns and
emissions, along with a plan to enhance safety with an expensive
phase out of a chemical used in gasoline production.
PBF is spending $100 million this year to improve
operations, and is budgeting another $50 million for upgrading
its electric power to prevent outages. Phasing out the use of
modified hydrofluoric acid at the plant presents a potentially
larger bill that was not on the table when PBF bought the
refinery last July.
This week, the company lowered its estimate of first-quarter
crude throughput at Torrance by 16 percent. It has said the
overhaul would allow the Torrance refinery to boost production
and hit profitability goals. "These things will be fixed," PBF
Chief Executive Tom Nimbley assured analysts on an earnings call
The problems are weighing on earnings. Last year, the
company missed its earnings goals due at least partly to outages
at Torrance and at PBF's Delaware City, Del., refinery. It
posted an operating loss of $61.7 million in the fourth quarter
compared with earnings of $168 million a year earlier.
"We left $75 million on the table in the fourth quarter and
more than $300 million in terms of lost profit opportunities for
the year," Nimbley said, discussing fourth quarter results.
The push to phase out hydrofluoric acid, widely used in
refining and semiconductor industries, came after a tank holding
the chemical suffered a "near miss" from a 2015 explosion,
according to a federal probe of the blast.
Hydrofluoric acid can form a toxic cloud at room temperature
and exposure can cause severe health problems and lead to death.
An estimated 330,000 people live or work near the refinery.
(Graphic - Sulfur Oxide Emissions From Southern California
The South Coast Air Quality Management District may push to
adopt a rule to phase out use of the acid by December. A study
commissioned by the air regulator estimated switching to
sulfuric acid would cost around $100 million for each of the
refineries in the region that use it.
PBF said in a statement that figure was "exceptionally low,"
and called a switch to sulfuric acid for gasoline output
cost-prohibitive. A company executive has said the switch could
worsen the plant's emissions.
A refiner in Texas is building a similar unit for $300
"I see no way they could avoid doing the upgrade if they
wanted to stay in the gasoline business," said Robert Campbell,
an analyst at consultancy Energy Aspects.
Acquisitions made PBF the fourth largest independent refiner
in the United States. It proved its skills by buying a Delaware
City refinery, overhauling it and quickly cutting annual
expenses by $200 million.
But the Torrance deal was troubled from the start. Closing
was contingent on the plant running 15 days straight without a
breakdown, but PBF went ahead despite an incident 10 days ahead
of closing, saying it was not material and Exxon covered repair
Local residents are pressuring elected officials and PBF due
to noticeable gas-flaring and emissions.
Last year, the facility released 487 tons of sulfur oxide,
nearly 20 times greater than Valero Energy Corp, Southern
California's second biggest polluter, which released just under
25 tons, according to figures from SCAQMD, which may be subject
PBF disputes the regulator's figures. It said 16 tons of the
sulfur releases were under its ownership. It expects that figure
to decline to less than 4 tons if its requests for revisions are
"They will turn things around eventually," said a person
familiar with the plant, adding: "It's going to take time."
Investors are not patient. In the last year, PBF's share
price has slid 35.1 percent to $21.11 per share, more than peers
Tesoro, which is down 9 percent, or Valero, which is up 1.6
percent over the same period.
(Reporting by Liz Hampton, Jessica Resnick-Ault, Jarrett
Renshaw; Editing by Gary McWilliams and David Gregorio)