PBF shares tumble on new air pollution regulation
Shares of oil refiner PBF Energy Inc fell more than 10% on Northern California's new air pollution requirement that could possibly shut down the company's Martinez refinery in the state.
Northern California regulators on Wednesday directed Chevron Corp's Richmond plant and PBF's Martinez refinery to slash their fine particulate air pollution, which will require costly modifications at the plants.
Under the stricter standard, the companies will likely have to install wet gas scrubbers to cut pollution spewed by their gasoline-making fluid catalytic cracking units (FCCU) within five years.
The new requirement is expected to cut PBF and Chevron's particulate matter emissions from its cat crackers by about 70%, the air quality district estimates.
California air quality regulators estimated the installations would cost Chevron about $241 million and PBF $255 million.
But Chevron and PBF have said it will cost them $1.5 billion and $800 million, respectively. PBF has warned that the hit could cause it to shut its facility, which it bought for about $1 billion from Royal Dutch Shell PLC last year.
Brokerage Tudor Pickering Holt & Co said Martinez shutting down was a real possibility, as the cost is "sizable" compared to the purchase price, citing stretched balance sheet.
However, the implementation date of the new regulation was still five years out and the matter could end up in the courts, Tudor Pickering added.
PBF exited the first quarter with about $1.5 billion in cash and liquidity estimated at about $2.3 billion.
Shares of the company were trading down 9% at $9.51 at 10:35 a.m. ET. (Reporting by Arathy S Nair in Bengaluru; Editing by Shinjini Ganguli)
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