In a 3-2 vote, the South Coast Air Quality Management District gave ExxonMobil approval to fully 
restore operations at its Torrance refinery, which had been operating at about 20% capacity following an explosion there in February of last year.
Restoration of the refinery’s full output, which will only take a few days, is expected to be followed by the sale of the facility to PBF Energy (NYSE:PBF) for $537.5 million . New Jersey-based PBF announced in September that it planned to acquire the refinery when it resumes full operations. The transaction is expected to closed within a few months.
The 750-acre Torrance refinery has a capacity of 155,000 barrels per day. It produces about 20% of the gasoline used in Southern California, and about 10% of the statewide demand.
The explosion occurred when Exxon Mobil was doing maintenance work on the refinery’s fluid catalytic cracking unit. The explosion also damaged the plant’s electrostatic precipitator, a pollution control system. ExxonMobil says it has spent $161 million on repairs, and an additional $1.1 million on upgrades.
Federal authorities said the explosion resulted from a deviation in safety procedures. A week earlier, problems with a piece of equipment known as an expander forced the shutdown of the fluid catalytic cracking unit. That resulted in steam entering a reactor, halting other needed repair work. Reducing the flow of steam allowed hydrocarbons to flow into the electrostatic precipitator, resulting in the explosion.
“We agree with the decision of the South Coast Air Quality Management District Hearing Board and appreciate its hard work and guidance as we work to safely restart the Torrance Refinery,” Exxon Mobil said in a statement.
ExxonMobil will pay $5 million in penalties for air pollution violations resulting from the explosion. About half of the funds will be used for projects benefitting the communities that surround the Torrance plant.
ExxonMobil’s sale of the refinery to PBF makes sense for both companies, according to industry analysts. Although it is one of the biggest refineries in California, the Torrance facility is relatively small compared to other refineries in ExxonMobil’s downstream portfolio.
PBF Energy currently owns four refineries in New Jersey, Delaware, Ohio and Louisiana. Acquisition of the Torrance plan will enable it to enter the California market.