The PBF Energy Delaware City refinery was in the news last week when it was learned that a loophole in the embargo on Russian crude oil led to a shipment from the Bahamas arriving in Delaware.
Business Insider and Bloomberg reported that the loophole allows Russian oil that arrived in the island nation before the embargo to be blended with other crude and shipped out.
While still refining overseas oil, the U.S. is a net oil exporter and has emerged as the world’s largest producer. Exports have helped prop up European economies after Russia invaded Ukraine and an embargo was imposed. Russia continues to export oil to other nations and has limited production in line with OPEC efforts to prop up oil prices.
The Delaware refinery earns its living by processing various grades of crude oil, often from overseas sources shipped up the Delaware River in smaller tankers.
PBF is skilled at finding crude oil from various sources. For a time, the refiner brought in a lot of crude from Canada and North Dakota via rail, spending $100 million on a rail terminal.
The refinery escaped demolition when PBF, with financing from private equity and some state funds, was able to buy the site from Valero, a respected refiner and marketer that, by many accounts, could not get a handle on running the plant. It did not help that oil prices had plunged due to the 2008-2009 mortgage-banking crisis.
PBF arrived with management from a previous refinery owner who knew how to keep the plant running and not lose the $1 million a day reported when Valero announced its shutdown. The deal saved hundreds of direct jobs and perhaps an equal number of maintenance and construction positions.
PBF also inherited the environmental problems of the high-pressure refining process. The result has been violations and fines. More than a few wished that Valero had gone ahead with plans for its demolition, and a while back, eco-activists headed north from Washington, DC, in their Priuses to make a case for not granting state permits.
Following the Delaware City deal, PBF bought refineries in New Jersey, Ohio, California, and the West Coast. The US will more than likely never see another new refinery as efforts to reduce fossil fuels continue.
PBF’s latest headache is a refinery in the Bay Area of northern California, where it struggles with neighbors and state regulators. That’s no surprise, given the state’s tough emissions standards and the complexities of refining crude. – Doug Rainey, chief content officer.
