UPDATE 2-PBF Energy expects crude by rail to be long-term trend

Thu Feb 21, 2013 3:18pm EST
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By Kristen Hays

HOUSTON Feb 21 (Reuters) - PBF Energy Inc expects crude by rail to be a "very, very long-term trend," particularly the movement of Canadian heavy crude, Chairman Tom O'Malley told analysts on Thursday.

"That is something that is around for the next decade," O'Malley said.

The company, which runs three U.S. refineries - two on the East Coast and one in Ohio - is also positioning itself to discharge crude and condensate produced in Ohio's Utica shale oil play via rail and truck when the output becomes available, said PBF Chief Executive Tom Nimbley.

Some analysts have questioned the growing investments in crude by rail, as numerous pipeline projects seek to move inland U.S. and Canadian crude production to refining markets.

But PBF sees crude by rail as key to transforming its East Coast refineries from money losers to profit makers. Several East Coast refineries have shut down because reliance on expensive imports left them unprofitable as players with easier access to cheaper inland U.S. and Canadian crudes fared much better.

Earlier this month, the company announced it had finished its second crude unloading facility at its 182,200 barrels-per-day (bpd) refinery in Delaware City, Delaware.

The facility can discharge up to 70,000 bpd of light sweet crude oil from North Dakota's Bakken shale and 40,000 bpd of Canadian heavy crude.   Continued...