At a time when other companies are shutting down their refineries, PBF Holding Co., has proposed a $1 billion project to produce clean fuels in Delaware. The project at the Delaware City Refinery is subject to regulatory approvals and labor agreements.
If work goes forward, the company would build a "mild hydrocracker and hydrogen plant" at the refinery, which returned to full operation earlier in the year.
The construction period will last approximately three years and when completed will process crude oil from both the Delaware City refinery and PBF's Paulsboro, N.J. refinery. The refinery is 12 miles east of Elkton, near the Delaware River.
The mild hydrocracker will reduce the sulfur content by 99 percent from 2,000 parts per million of sulfur to less than 15 parts per million of sulfur, resulting in a reduction of more than 6,500 tons per year of sulfur dioxide emissions, according to a company release.
In addition, the mild hydrocracker will enable the refinery to process heavier crude oil while producing a greater volume of clean transportation fuels.
The project hinges on timely issuance of federal and state environmental and other permits that will not increase the cost to build or operate the project, as well as labor agreements aimed at building the project in a cost-effective manner, according to PBF.
The Delaware City Refinery was purchased in June 2010 after being closed earlier by former owner Valero. It underwent a restarting process and went into full operation in fall of this year. The Paulsboro refinery was purchased in December 2010.
It is estimated that the PBF Clean Fuels project will require more than million of local man hours of labor to complete. It will also add approximately 50 jobs to the labor force at the Delaware City Refinery. Upon completion the combination of the Delaware City and Paulsboro refineries will be the premier refining complex on the eastern seaboard and will be well positioned to compete well into the 21st century, according to the PBF release.
The refitted refineries would also compete in a market with fewer players on the East Coast, due to refinery shutdowns. Refiner Sunoco is shutting down its Marcus Hook site, due to financial losses.
PBF says the Delaware City refinery is profitable, after a successful effort to reduce costs and the ability to refine less expensive grades of crude oil with higher sulfer content. Higher high-sulfur crude oil prices led to losses of $1 million a day when Valero operated the refinery.
Thomas D. O'Malley, PBF's chairman, said, "The PBF Clean Fuels Project will ensure the long-term survivability of the Delaware City and Paulsboro Refineries in good markets and bad. It is imperative however that we are able to swiftly move with the governmental agencies to get the appropriate permitting in place. It has always been our intention to make Delaware City and Paulsboro world class refineries which will certainly be the case with this project."
Delaware Governor Jack Markell said, "When PBF Energy purchased the shuttered Delaware City Refinery, they pledged to run a world-class facility employing hundreds of Delawareans. With the successful restart behind us, PBF is backing that pledge with a $1 billion investment in the long-term future of the Delaware City refinery."
"Not only will their investment help ensure the long-term viability of the Delaware City and Paulsboro refineries, but will mean hundreds of thousands of man-hours during construction, as well as additional permanent jobs at Delaware City. We are thrilled with today's announcement."
The State of Delaware put together a financial package that was a factor in the reopening of the refinery by PBF. The site was purchased from Valero for $220 million.
The Delaware City refinery has a processing capacity of 190,000 barrels per day. The refinery's production is sold in the U.S. Northeast via pipeline, barge, and truck distribution.
Paulsboro has a capacity of 170,000 barrels per day. Major process units include a delayed coking unit, a fluid catalytic cracking unit, hydrotreating units, a reformer, an alkylation unit, and 12,000 barrels per day of lube oil processing capacity. Paulsboro is located approximately 35 miles from the Delaware City refinery.