PBF Energy 2012 Annual Report Download - page 28

Our recent historical earnings have been concentrated and may continue to be concentrated in the future.
Our three refineries have similar throughput capacity, however, favorable market conditions due to, among
other things, geographic location, crude and refined product slates, and customer demand, may cause an
individual refinery to contribute more significantly to our earnings than others for a period of time. For example,
our Toledo, Ohio refinery has produced a substantial portion of our earnings over the past several quarters. As a
result, if there were a significant disruption to operations at this refinery, our earnings could be materially
adversely affected (to the extent not recoverable through insurance) disproportionally to Toledo’s portion of our
consolidated throughput. The Toledo refinery, or one of our other refineries, may continue to disproportionally
affect our results of operations in the future. Any prolonged disruption to the operations of such refinery, whether
due to labor difficulties, destruction of or damage to such facilities, severe weather conditions, interruption of
utilities service or other reasons, could have a material adverse effect on our business, results of operations or
financial condition.
A significant interruption or casualty loss at any of our refineries and related assets could reduce our
production, particularly if not fully covered by our insurance. Failure by one or more insurers to honor its
coverage commitments for an insured event could materially and adversely affect our future cash flows,
operating results and financial condition.
Our business currently consists of owning and operating three refineries and related assets. As a result, our
operations could be subject to significant interruption if any of our refineries were to experience a major
accident, be damaged by severe weather or other natural disaster, or otherwise be forced to shut down or curtail
production due to unforeseen events, such as acts of God, nature, orders of governmental authorities, supply
chain disruptions impacting our crude rail facilities or other logistical assets, power outages, acts of terrorism,
fires, toxic emissions and maritime hazards. Any such shutdown or disruption would reduce the production from
that refinery. There is also risk of mechanical failure and equipment shutdowns both general and following
unforeseen events. Further, in such situations, undamaged refinery processing units may be dependent on or
interact with damaged sections of our refineries and, accordingly, are also subject to being shut down. In the
event any of our refineries is forced to shut down for a significant period of time, it would have a material
adverse effect on our earnings, our other results of operations and our financial condition as a whole.
As protection against these hazards, we maintain insurance coverage against some, but not all, such
potential losses and liabilities. We may not be able to maintain or obtain insurance of the type and amount we
desire at reasonable rates. As a result of market conditions, premiums and deductibles for certain of our insurance
policies may increase substantially. In some instances, certain insurance could become unavailable or available
only for reduced amounts of coverage. For example, coverage for hurricane damage can be limited, and coverage
for terrorism risks can include broad exclusions. If we were to incur a significant liability for which we were not
fully insured, it could have a material adverse effect on our financial position.
Our insurance program includes a number of insurance carriers. Significant disruptions in financial markets
could lead to a deterioration in the financial condition of many financial institutions, including insurance companies
and, therefore, we may not be able to obtain the full amount of our insurance coverage for insured events.
Our Toledo refinery is subject to interruptions of supply and distribution as a result of our reliance on
pipelines for transportation of crude oil and refined products.
Our Toledo refinery receives a substantial portion of its crude oil and delivers a portion of its refined
products through pipelines. The Enbridge system is our primary supply route for crude oil from Canada, the
Bakken region and Michigan, and supplies approximately 55% to 60% of the crude oil used at our Toledo
refinery. In addition, we source domestic crude oil through our connections to the Capline and Mid-Valley
pipelines. We also distribute a portion of our transportation fuels through pipelines owned and operated by
Sunoco Logistics Partners L.P. and Buckeye Partners L.P. We could experience an interruption of supply or
delivery, or an increased cost of receiving crude oil and delivering refined products to market, if the ability of
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