PBF executives have the experience necessary to run refineries there, Chairman Tom O’Malley said on a conference call with analysts today. O’Malley was chief executive officer of Tosco Corp., which operated what is now Tesoro Corp. (TSO)’s Golden Eagle plant near San Francisco.
“We want to have some element of growth in our company,” O’Malley said. “If we don’t see growth in the company, they ought to fire me.”
O’Malley is voicing interest in California, the world’s ninth-largest economy, as refinery margins on the U.S. West Coast hover at the highest seasonal level in seven years, boosted by plant repairs and fuel exports to Latin America. The state’s refiners are also pulling in a record volume of oil by rail from North American shale plays, allowing them to displace costly imports from abroad.
Tesoro bought the 246,000-barrel-a-day Carson refinery in Southern California from BP in June with plans to integrate the complex with its adjacent Wilmington plant. The company said the combination will improve its distillate yields, shrink distribution costs and cut emissions regulated by the state as part of its carbon cap-and-trade program.
Valero’s chief executive officer, William Klesse, told analysts on a conference call yesterday that the financial performance of the San Antonio-based company’s California refineries is “not that great.”
“It is our weakest group of assets now financially, operationally though it’s excellent,” Klesse said.
Demand has yet to recover from the 2008 global recession, he said.
“Although we’re starting to see some improving economy and some uptick in demand, the focus that we have is to work on our crude costs and to continue to work on the operating costs and, of course, adjusting our yields to fit the market,” Klesse said.
Valero runs the 132,000-barrel-a-day Benicia refinery near San Francisco as well as the 78,000-barrel-a-day Wilmington complex near Los Angeles.
California’s refineries, which have traditionally run on oil from the state’s San Joaquin Valley, Alaska’s North Slope and the Middle East, brought in a record 1.18 million barrels by rail in December from places including Canada, Wyoming and North Dakota, according to the most recent data available from the state Energy Commission.
The 3-2-1 crack spread on the West Coast, a rough indicator of refining profitability, widened 94 cents yesterday to $22.43 a barrel, the biggest margin for the time of year since 2007, data compiled by Bloomberg show.
The region exported the most refined product last year since 1992, according to the Energy Information Administration, the Energy Department’s statistical arm.