February 11, 2013 [OPIS] - In the last of three presentations made at industry conferences since mid-January, PBF Energy has raised the possibility that a master limited partnership (MLP) is in its future.
In the last slide of a set being put before the Credit Suisse Energy Summit today, the newly public refining company poses the terse question: PBF MLP?
Investors have responded enthusiastically to midstream master limited partnerships. Marathon launched its logistics IPO — MPLX — in late October and shares in the company have risen 26%. Alon USA Partners, which includes the company’s Big Spring Texas refinery, was launched as an MLP on Nov. 20, and stock in the company has since climbed by 34%.
PBF now asserts it has the assets for a logistics-focused MLP. According to the presentation, possible MLP assets include but are not limited to: the Delaware City rail infrastructure (including railcars); refinery truck racks; pipeline assets and tankage.
On Monday, PBF announced that it would soon see the arrival of PBF’s first unit train of Bakken crude oil into the new light-oil unloading portion of the Delaware City “rail gateway.” Seventeen more unit trains are scheduled to arrive in the next week and a half.
The plant’s rail facilities, adjacent to the 190,000-b/d Delaware City refinery, currently have the capability of discharging 110,000 b/d of oil — 40,000 b/d of heavy crude and 70,000 b/d of light crude.
In fact, PBF is so satisfied with the Canadian heavy crude it has run at the Delaware refinery that it plans to spend $50 million to add another 40,000 b/d of heavy crude unloading capacity there, Monday’s announcement said. The addition is to be completed in the fourth quarter of this year. Some of the railcar crude will ultimately move by barge from Delaware City to PBF’s refinery in Paulsboro (Billingsport & Paradise), New Jersey.
PBF has also entered into agreements to increase the number of railcars it owns or leases to transport crude oil. The company will add 2,000 coiled, insulated cars to move heavy crude beginning in 2014 and continuing through the first quarter of 2015. Delivery of a previously contracted 1,600 coiled cars begins in the second quarter of this year.
In addition, the company will increase its fleet of general purpose cars by 500 (to be delivered in 2013) to bring the total to 800.
The latest rail infrastructure additions will increase Delaware City’s intake of cost-advantaged crude oil at a faster pace in 2013, the company said Thursday. PBF plans that volume to hit 70,000 b/d in the first quarter, 100,000 b/d in the second quarter, 110,000 b/d in the third quarter and 150,000 b/d in the last three months of the year.
The company noted that those volumes were based on current forecast and railcar delivery schedules and are subject to change.
Other features of the Delaware City rail facility include additional ladder track storage for 300 railcars and a double loop track that will hold two unit trains of 200 or more railcars.
