PBF Energy 2012 Annual Report Download - page 63
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consists of sweet crude oil and other feedstocks and blendstocks. We are now also running a significant
volume of price advantaged domestic crudes. These feedstocks historically have priced at a discount to
Dated Brent;
• as a result of the heavy, sour crude slate processed at Paulsboro, we produce low value products including
sulfur, petroleum coke and fuel oil. These products are priced at a significant discount to gasoline and
heating oil and represent approximately 8% to 9.5% of our total production volume; and
• the Paulsboro refinery produces Group I lubricants which, through an extensive production process, has a
low volume yield which limits the volume expansion on crude inputs.
Toledo Refinery. The benchmark refining margin for the Toledo refinery is calculated by assuming that four
barrels of benchmark WTI crude oil are converted into three barrels of gasoline, one-half barrel of ULSD and
one-half barrel of jet fuel. We calculate this refining margin using the Chicago market values of gasoline and
ULSD and the United States Gulf Coast value of jet fuel against the market value of WTI crude oil and refer to
this benchmark as the WTI (Chicago) 4-3-1 benchmark refining margin. Our Toledo refinery has a product slate
of approximately 51% gasoline, 35% distillate (comprised of approximately 45% jet fuel and 55% ULSD), 5%
high-value petrochemicals (including nonene, tetramer, benzene, xylene and toluene) with the remaining portion
of the product slate comprised of lower-value products (6% LPGs, 2.5% fuel oil and 0.5% other). For this reason,
we believe the WTI (Chicago) 4-3-1 is an appropriate benchmark industry refining margin. The majority of
Toledo revenues are generated off Chicago-based market prices.
The Toledo refinery’s realized gross margin on a per barrel basis has historically differed from the WTI
(Chicago) 4-3-1 benchmark refining margin due to the following factors:
• the Toledo refinery processes a slate of domestic sweet and Canadian synthetic crude oil. Historically,
Toledo’s blended average crude costs have been higher than the market value of WTI crude oil;
• the Toledo refinery is connected to its distribution network through a variety of third party product
pipelines. While lower in cost when compared to barge or rail transportation, the inclusion of transportation
costs increases our overall cost relative to the 4-3-1 benchmark refining margin; and
• the Toledo refinery generates a pricing benefit on some of its products, primarily its petrochemicals.
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