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Phillips 66, PBF Cutting Production as Sandy Approaches

October 29, 2012

Refiners including Phillips 66 (PSX:US) and PBF Energy Inc. (PBF:US) reduced output at U.S. East Coast plants before the arrival of Hurricane Sandy, which may become the worst storm to hit the region in 100 years.

Phillips shut its 238,000-barrel-a-day Bayway refinery in New Jersey early today. Hess Corp. (HES:US) will complete the shutdown of its Port Reading plant in New Jersey this afternoon. NuStar Energy LP (NS:US) shut its Paulsboro, New Jersey, asphalt refinery. Philadelphia Energy Solutions’ Philadelphia plant and PBF’s Delaware City, Delaware, and Paulsboro refineries are operating at reduced rates, the companies said.

New York, New Jersey, Baltimore, Long Island, Delaware Bay and Connecticut ports were closed to vessel traffic by the U.S. Coast Guard, halting tanker deliveries that help supply the region’s refineries with crude oil. There are seven plants in the area with a combined capacity of about 1.29 million barrels a day, according to data compiled by Bloomberg.

“These are significant shutdowns” and water damage is a major risk to the refineries, James Williams, president of energy research firm WTRG Economics, said by telephone from London, Arkansas. “If there are no glitches, everyone will be back up in a week to a week and a half.”

East Coast Supplies

Extended outages may deplete East Coast gasoline supplies, which Energy Department data show are 9.1 percent below a year ago. Regular gasoline at the pump, averaged nationwide, cost $3.543 a gallon yesterday, down from the 2012 high of $3.936 on April 4, according to data from Heathrow, Florida-based AAA, the largest U.S. motoring group.

Cherice Corley, a spokeswoman for Philadelphia Energy Solutions’ Philadelphia refinery, said the 355,000-barrel-a-day plant is operating at reduced rates.

Michael Karlovich, a Parsippany, New Jersey-based spokesman for PBF, said by e-mail that the company’s 182,200-barrel-a-day Delaware City and 185,000-barrel-a-day Paulsboro refineries are both operating at reduced rates.

Trebor Banstetter, an Atlanta-based spokesman for Delta Air Lines Inc. (DAL:US)’s Monroe Energy LLC subsidiary that operates the 185,000 barrel-a-day Trainer, Pennsylvania, plant, said that “predicted storm conditions have not reached the severity levels where we would start shutting down our operations.”

Colonial Pipeline

Colonial Pipeline Co., which operates the largest system connecting the Gulf and East coasts, began shutting delivery lines along the East Coast as terminal customers in Virginia, Maryland, New Jersey and New York halted operations. Line 3, an 825,000-barrel-a-day oil products line running from Greensboro, North Carolina, to Linden, New Jersey, was expected to shut later today, a bulletin to shippers showed.

Colonial said it was monitoring the potential impact of a Line 3 shutdown on two other main lines, Lines 1 and 2.

The East Coast received 1.42 million barrels a day of gasoline in July by pipeline from refineries along the Gulf Coast, Energy Department data show.

Sandy packed maximum sustained winds of 90 miles (150 kilometers) per hour, the National Hurricane Center said at 2 p.m. New York time. The storm’s eye was about 175 miles south- southeast of New York, moving northwest at 28 mph. It isn’t expected to weaken before landfall at Cape May, New Jersey, the center said. It may bring a surge as high as 11 feet (3.4 meters) in New York Harbor.

The hurricane, blamed for 65 deaths in the Caribbean before it began barreling toward the U.S. East Coast, is expected to converge with two other systems, creating a phenomenon the National Weather Service has dubbed Frankenstorm.

To contact the reporter on this story: Aaron Clark in New York at

To contact the editor responsible for this story: Dan Stets at

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