PBF Energy Braces for Another Tough Year in Refining, Eyes Renewable Diesel
The COVID-19 pandemic made no exceptions for refiner PBF Energy Incorporated (NYSE:PBF) (Parsippany, New Jersey), which saw its 2020 revenues fall 42% from 2019 to about $3.65 billion, as many drivers reduced their road time and per-barrel refining margins fell below $10, usually the breakeven line for profits. Executives bluntly acknowledged that its product demand will not see substantial growth until vaccine distribution is improved. Industrial Info is tracking about $680 million in active projects from PBF, only $100 million of which is attributed to unit additions.
PBF reported a net loss of about $1.4 billion for 2020, compared with net profits of $319.4 million in 2019, as pandemic-related concerns drove U.S. fuel demand down 12% from the previous year. The fourth quarter saw a net loss of $298 million, compared with profits of $53 million in fourth-quarter 2019.
Later this year, PBF is expected to begin $60 million in upgrades on the fluid catalytic cracker unit (FCCU) at its refinery in Torrance, California. The company says it will replace dated components in the 100,000 BBL/d FCCU. It also is considering a proposed upgrade to its hydrofluoric alkylation (HF Alky) unit at Torrance, which, if approved, would not begin until first-quarter 2022 at the earliest. For more information, see Industrial Info's project reports on the FCCU and HF Alky Unit.
PBF is hoping to establish a foothold in the U.S. renewable diesel market, which remains in its infancy. The company is reviewing its options for a proposed renewable diesel unit addition at its refinery in Martinez, California. If approved, it would repurpose a pair of mothballed lube oil hydrotreaters to produce the green fuel. For more information, see Industrial Info's project report.
"All renewable diesel produced in this country, and most of the produced in the world for that matter, has a market incentive to be sold in the state of California," said Matthew Lucey, the president of PBF, in a quarterly earnings-related conference call last week. "As the owner and operator of two large California refineries, along with proprietary logistics assets, PBF will look to play a significant role to third parties in the distribution of renewable diesel as it enters the state." He also said PBF's refining footprint gives it a competitive advantage in manufacturing renewable diesel.
During the fourth quarter, PBF began a reconfiguration of its East Coast Refining System, which comprises its refineries in Delaware City, Delaware, and Paulsboro, New Jersey. Multiple units at the Paulsboro refinery were idled, effectively removing 85,000 barrels per day (BBL/d) of refining capacity. The company still is considering a proposed update to Paulsboro Crude Unit 7, which would improve efficiency at the 110,000-BBL/d unit. If approved, it would not begin until first-quarter 2022 at the earliest. For more information, see Industrial Info's project report and October 30, 2020, article - PBF Energy to Idle Paulsboro Refining Units, Looks for More Cost Reductions.
"In the fourth quarter, we ran our refining system at just over 675,000 barrels a day in total," Lucey said in the conference call. "Until demand picks up, we will continue to operate at reduced rates. We believe that the global industry rationalization was necessary and will likely continue."
PBF is preparing for an estimated $20 million upgrade to its crude unit and an estimated $15 million upgrade to its continuous catalytic reformer (CCR) unit at the Delaware City Refinery, which have capacities of 190,000 and 43,000 BBL/d, respectively. Both upgrades are scheduled to begin and end in the second quarter. For more information, see Industrial Info's project reports on the crude unit and CCR unit.
"We kept the strong attributes of Paulsboro with the [flexible] production, very high margin, and asphalt much stronger than I would have envisioned last year--and probably will be the case going forward with infrastructure investment," said Thomas Nimbley, the chief executive officer of PBF, in the conference call. "And we basically eliminated 85,000 barrels of lower-performing fuels operation in Paulsboro and moved some of that over to a stronger fuels operation in Delaware."
Executives say refining capital expenditures will be about $150 million for the first six months of 2021, a relatively low number that is attributed, in part, to an absence of major maintenance activity. "The capital expenditures will go up beginning in 2022," Nimbley said in the conference call. "We will see some turnarounds start to come into play in 2022 and over the ensuing couple of years."
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