Will Exxon Mobil’s sale of its Torrance refinery lead to lower gas prices in L.A.?
Exxon Mobil has completed the sale of its Torrance plant to a New Jersey oil refinery company, a $537.5-million deal that brings a new player into the California market.
PBF Energy is the first new owner of the Torrance plant since Mobil Oil acquired the facility in 1966.
The 600-worker plant, which sits on 750 acres, can produce up to 155,000 barrels of refined oil products per day. At its peak, the Torrance refinery accounts for 10% of the state’s refined capacity and 20% of the capacity in Southern California.
It took 10 months to close the deal because Exxon Mobil first had to repair the plant after an explosion in February 2015 destroyed a pollution control system at the refinery, crippling it for almost a year and a half. The incident forced Exxon Mobil to reduce production to less than 20% of its capacity.
“It’s a little bit of an unusual transaction in that you had this long time period between the agreements and the closing,” said Jeff Dill, president of PBF’s western region. “One of our big focuses is running the plant reliably. Exxon Mobil has certainly completed the repairs from the explosion last year.”
As part of the transaction, PBF Energy also acquired terminals and pipelines from Exxon Mobil, including a pipeline that runs to oil fields in Bakersfield. PBF Energy also is leasing space at the Port of Los Angeles, which Dill said may help the company deliver gas to Northern California.
Gasoline is the Torrance refinery’s primary product, but it also has other such byproducts as sulfur, used in fertilizer, and carbon dioxide for soda and beer.
Gordon Schremp, senior fuels analyst at the California Energy Commission, has emphasized the need to bring the Torrance refinery back to full operation as a way to reduce gasoline prices in the state. During the time that the facility’s production levels remained low, gasoline prices in the Los Angeles area reached as much as a $1.50 a gallon more than the national average.
California Atty. Gen. Kamala Harris is investigating whether oil refineries manipulated gasoline prices during Torrance’s production outage, causing the high prices.
Schremp said he anticipates that PBF Energy will run a different kind of operation than Exxon Mobil.
“I think you’re going to be seeing a player that’s operating in a more independent fashion,” Schremp said.
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