HOUSTON Feb 13 Refiner PBF Energy Inc
will rely entirely on newer railcars to move Bakken crude oil
starting on April 1, Chairman Tom O'Malley said on Thursday, as
the industry faces pressure to use safer cars that can better
The newer cars will also be deployed around June to carry
Canadian crude, said the company, which runs refineries in Ohio,
New Jersey and Delaware.
"While we are expanding our rail operations, we are doing so
with a keen focus on safety," he told investors on a quarterly
A spate of fiery crashes involving trains carrying crude oil
has put pressure on producers, railroads and refiners to
redouble safety procedures. A Norfolk Southern Corp
train carrying crude derailed in Pennsylvania on Thursday.
PBF said it expects crude trains generally to move more
slowly across the country as the overall supply chain comes
under scrutiny. Refiner Tesoro Corp said last week it
was replacing older railcars as well.
The Railway Supply Institute, which represents tank car
owners, has urged federal regulators to adopt safety standards
already embraced in October 2011 by the Association of American
Railroads, the rail industry's trade group.
Under those standards tank railcars known as DOT-111s built
after October 2011 should have thicker hulls and reinforced
valves to better protect against punctures or leaks in
PBF executives said that by July they expect to have two
offloading projects completed with capacity to unload about
80,000 barrels per day (bpd) of heavy crude, up from 40,000 bpd,
and 120,000-130,000 bpd of light crude, up from about 105,000
They said at the end of the first quarter they plan a
three-week turnaround at their Paulsboro, New Jersey, refinery.
In the fourth quarter, they will do a turnaround at the Toledo,
Ohio plant lasting about 40 days.
O'Malley said it was too expensive for the company to rely
on U.S.-flagged ships to move crude from the U.S. Gulf Coast to
the East Coast because doing so would add $5 a barrel to freight
costs. Companies must use domestic shippers under the Jones Act.
He said that as part of the broader debate about lifting the
U.S. crude export ban as domestic output surges, policymakers
should consider scrapping the ethanol mandate for gasoline and
the Jones Act - both of which can drive up costs for refiners.
"If you're going to export crude, please remove that mandate
and remove the American flag law and then we can move forward,"
he said. "We, like most people in business are for the free
market, but I'm not quite sure how there is a free market when
the consumer on the East Coast will have to absorb an extra $5
dollars a barrel in freight costs."