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| Fri, 23rd Jul 2021 0:01:00 |
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PBF shares tumble 10% on new California air pollution regulation |
July 22 (Reuters) - Shares of oil refiner PBF Energy Inc (PBF.N) fell more than 10% on Thursday after new air pollution requirements were approved that could hit the company's Martinez refinery.
Northern California regulators on Wednesday directed Chevron Corp's (CVX.N) 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.
PBF shares traded down 10.7% at $9.34.
The antipollution measure is expected to cut particulate matter emissions from the two plants by about 70%, the Bay Area Air Quality Management District estimates. Health and environmental officials testified on Wednesday of harmful effects for local residents from the emissions. read more
California air quality regulators estimated the installations would cost Chevron about $241 million and PBF $255 million.
Chevron and PBF have said it will cost $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 (RDSa.L) 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 its 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.
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