PUBLIC WORKSHOP QUARTERLY REFINERY UPDATE February 28, 2017 Background Material and Web Links www.TorranceCA.Gov/Refinery AGENDA A) Status Updates 1. Torrance Refining Company Update 2. Southern California Edison power supply reliability 3. TFD Update regarding ARF (Airborne Reduction Factor) and CAL ARP Regulations 4. Torrance Alerts System Staffing 5. City’s proposal of projects for the $2.7 Million SCAQMD Supplemental Environment Project (SEP) Fund Air Quality Improvement Projects 6. South Coast Air Quality Management District: Rulemaking update on 1118 (Control of Emissions from Refinery Flares) and 1410 (Hydrogen Fluoride Storage and Use) B) Return to City Council in 6 months with an update on following items: 1. Work with SCAQMD to implement SEP Projects (if awarded) 2. Alternative Alkylation Technology 3. New regulations update (Rule 1118 and Rule 1410) INTRODUCTIONS • Torrance Refining Company • Jeff Dill, PBF Energy Western Region President • Steve Steach, Refinery Manager • Southern California Edison • Michael B. Williams, Principle Manager • Neal Hunstein, Principle Manager • Southern California Air Quality Management District • Philip M. Fine, Ph.D., Deputy Executive Officer • Fire Chief Martin Serna • Mary Giordano, Assistant City Manager • David Dumais, Deputy Fire Chief • Michael Smith, Cable and Community Relations Manager • Aram Chaparyan, Assistant to the City Manager TORRANCE REFINING COMPANY • Jeff Dill, PBF Energy Western Region President • Steve Steach, Refinery Manager ?errance Re?ning Company Torrance Refinery Update Torrance City Council Meeting February 28, 2017 Safe Harbor Statements This presentation contains forward-looking statements made by PBF Energy Inc. and PBF Logistics LP (together, the “Companies”, or “PBF” or “PBFX”) and their management teams. Such statements are based on current expectations, forecasts and projections, including, but not limited to, anticipated financial and operating results, plans, objectives, expectations and intentions that are not historical in nature. Forward-looking statements should not be read as a guarantee of future performance or results, and may not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking statements are based on information available at the time, and are subject to various risks and uncertainties that could cause the Companies’ actual performance or results to differ materially from those expressed in such statements. Factors that could impact such differences include, but are not limited to, changes in general economic conditions; volatility of crude oil and other feedstock prices; fluctuations in the prices of refined products; the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems with third party logistics infrastructure; effects of litigation and government investigations; the timing and announcement of any potential acquisitions and subsequent impact of any future acquisitions on our capital structure, financial condition or results of operations; changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business or industry, including any lifting by the federal government of the restrictions on exporting U.S. crude oil; actions taken or non-performance by third parties, including suppliers, contractors, operators, transporters and customers; adequacy, availability and cost of capital; work stoppages or other labor interruptions; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; inability to complete capital expenditures, or construction projects that exceed anticipated or budgeted amounts; inability to successfully integrate acquired refineries or other acquired businesses or operations; effects of existing and future laws and governmental regulations, including environmental, health and safety regulations; and, various other factors. Forward-looking statements reflect information, facts and circumstances only as of the date they are made. The Companies assume no responsibility or obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information after such date. 6 Actions Taken Since the Acquisition  Brought in experts to work with our teams on high priority projects (MHF, Electrical Reliability and others)  Implemented high level cross-functional project reviews of all safety critical jobs  Reviewed and enhanced our preventative maintenance programs  Safely completed several large maintenance projects:  Purchased many critical spare pumps  Safely completed three steam boiler for inspections, repairs and re-permitting by the State of California  Completed overhaul and repair of our Gas Turbine Generator  Safely replaced the caustic scrubbing tower at the Alkylation Unit Acid Evacuation System  Overhauled a large Crude Unit compressor correcting an original manufacturing defect  Empowering the workforce to review each task and if they feel a task is unsafe to stop the job immediately and reassess. 7 2017 Turnaround Highlights  Beginning in early April, four units at the refinery will be shutdown in succession and cleaned, inspected, and repaired  Work involves the following:          84 vessels, drums and towers 2 furnaces 57 exchangers 18 heaters 279 piping work 388 valves 15 machinery-related jobs 149 instrumentation work 56 electrical equipment  Investment of over $100 million  Types of work include:  Opening, inspecting and repairing and/or upgrading of process heaters, heat exchangers, drums/towers/vessels  Changing catalyst in 4 reactors; inspecting and repairing these reactors  Various valve inspections, repairs, calibrations and replacements  Replacing baseplates, motors, seals and rotors 8 Torrance Refinery Economic Impacts • Operated in City of Torrance since 1929 • 600+ employees / 500+ contractors • Average annual wages and benefits for refinery workers in California is $128,000 • Every refinery job produces 9 more jobs in the economy Taxes • Pay $16 million in annual property tax • Pay $18 million in other taxes Economic Impact Source: Company Profile 2015 • $122 million spent in salaries, wages and benefits. • $125 million spent is city of Torrance • $400 million spent in Los Angeles County 9 Refinery Electrical System  Southern California Edison (SCE) has provided power since 1907  La Fresa Substations serve the refinery and surrounding community -   Owned and operated by SCE 220,000 volts incoming power 66,000 volts outgoing power Nine commercial substations  Two of those substations for the refinery 160,000 customers in five cities Four dedicated 66,000 volt transmission lines to the refinery SCE also owns, operates, and maintains 12,800 volt system within the refinery  Refinery also produces its own power - Average refinery supply 71 megawatts - Average refinery production 29 megawatts  Issues in SCE’s 66kV residential system can directly impact the refinery - Arc over during heavy fog - Metallic (Mylar) Balloons - Raccoons and other critters - Traffic accidents - Switching errors - Falling poles - Heavy wind 10 Refinery Electrical Reliability Project  The permanent solution will address approximately 90% of SCE’s electrical supply issues.  SCE will install and connect to their system via new 220 KV underground cables to new 220kV switching station on refinery property.  The SCE 220 KV system connection is on SCE right of way.  The refinery will install new 220 KV cables and transformers connecting the new SCE switching station to the existing refinery electrical distribution system. This Phase I is expected to address improve SCE’s reliability by approximately 50%.  Phase II will involve refinery infrastructure upgrades and will improve SCE’s reliability by an additional 40% for total of approximately 90% reliability improvement. This will require new local substations and upgrades/modifications to the refinery electrical distribution system, which will have to be synchronized with future unit shutdowns.  TORC is currently meeting with the City of Torrance to determine what type of permits will be needed for this project. 11 ?nance Re?ning Company Refinery Electrical Reliability Project 12 ?nance Re?ning Company 13 SOUTHERN CALIFORNIA EDISON • Michael B. Williams, Principle Manager • Neal Hunstein, Principle Manager 220 kV Dedicated Service • SCE & PBF Engineering and Management staff engaged in weekly meetings • Pursuing 220 kV dedicated service from new SCE switching station • Connect to an existing 220 kV line adjacent to PBF Refinery property and install two 220 kV underground cables to the new dedicated switching station • New switching station to be enclosed Gas Insulated Switchgear • PBF Refinery to install two 220 kV underground cable feeds from switching station to new PBF 220 kV substation 220 kV Dedicated Service • Method of Service (MOS) Study In Progress • Preliminary engineering and schedule development commenced • Target end of May to complete study • In close coordination with PBF, restarted upgrades at La Fresa substation to improve reliability to nearby communities FIRE CHIEF REMARKS - Fire Chief Martin Serna Safety Briefing to Community Torrance Refinery Technology Workshop David A. Dumais Deputy Fire Chief City of Torrance Fire Department AGENDA • Alkylation Background and Use in Torrance • Modified Hydrofluoric Acid (MHF) Application at the Torrance Refinery • Barrier Usage and Contribution to MHF Effectiveness • Acid Reduction Factor (ARF) & Societal Risk Index (SRI) • Next Steps • Q/A Confidential Business Information (CBI) • The current Alkylation Technology was researched by Mobil Research and Development then became the Property of ExxonMobil when the companies merged. • This technology was then sold to the PBF Energy and Torrance Refining Company by ExxonMobil. • ExxonMobil maintain this technology as proprietary and therefore can not disclose without the permission of ExxonMobil and Honeywell/UOP • COT is prevented from thoroughly disclosing the complete Alkylation technology chemistry used at the Torrance Refinery. Why Do Refineries Have Alkylation Units? • Refineries use many different types of processes to convert nature’s complex petroleum mixtures to gasolines that burn cleanly and minimize air pollution. • Alkylation is one of these processes that are able to help make clean fuels that minimize our “environmental footprint” and are required by CA regulations. Alkylation History • 1940’s – Alkylation technology for high octane fuels for military aircraft • Post WWII – Alkylate used as important component in lead-free fuels • 1986 Goldfish Test – New concern over release and dispersion characteristics of anhydrous hydrogen fluoride (HF) • Torrance Fire Department requires Risk Management and Prevention Plan (RMPP) for HF use from Mobil made possible by new California legislation • 1989 – City of Torrance files lawsuit against Mobil declaring the refinery a public nuisance Alkylation History Cont. • 1990 - Consent Decree Requirement – Must be as-safe/safer than the sulfuric acid alkylation (considered other viable alternative) • 1991-1998 – Vetting by Court / Court Appointed Safety Advisor • 1992-1993 - Mobil constructs a Pilot Plant at their Paulsboro • Refinery to validate Modified HF (MHF) development. • Based on chemistry, laboratory testing, and field testing: Using an additive, when mixed with HF, reduces its vapor-forming tendencies, with most of the HF "raining out" or landing on the ground within a short distance of a release. • 1995 – 65% Airborne Reduction Factor (ARF) was target approved by the Court based on Court Appointed Safety Advisor vetting, laboratory tests, field tests, and testing of the Pilot Plant in Paulsboro, NJ. Alkylation History Cont. • 1991-1998 – Vetting by Court / Court Appointed Safety Advisor (Continued) • 1995-1997 – Site Construction/Implementation at the Torrance Refinery • 1997 – When scaled up to full production, unit operability/stability problems were encountered. • 1998 –Required a reduction in additive concentration for unit stability from 65% to 50 % unbarriered ARF - Upgrades Applying Barrier Technology on Highest-Hazard Areas: Flanges, Recirculation Pumps, and Settlers in the Alkylation Unit Protecting the Public • Converting the Alkylation Unit to MHF doesn’t make the process any faster, better, or more economic. • The only reason for the conversion was to make things safer for the Torrance Community. • MHF improves safety by changing the way in which the mixture of liquids in the alkylation unit behave if accidently released. Common Alkylation Processes • Contemporary Applications • Hydrofluoric Acid (HF) • Sulfuric Acid • State-of-the-Art (1997) in HF Alkylation Technology Safety • Modified HF – Uses a Trade Secret “Additive” that works with HF catalyst • Emerging Technologies Being Tested Elsewhere • Liquid Ionic Catalyst • Solid Catalyst • TFD, Torrance Refining Company, and other agencies are monitoring these emerging technologies. MHF Alkylation Unit Chemistry • Chemicals in Alkylation Unit • Normal HF (HF) is a colorless liquid that boils at 67.1F at sea level, but it is kept in its liquid state within the piping of the Alkylation Unit because it is under pressure • Hydrocarbon Mixture (HC)– Mostly isobutane, butylene, and propylene being catalyzed to create high-octane blending stock • “Additive” – Significantly decreases the potential hazard associated with an accidental release of Modified Hydrofluoric Acid (MHF) • ASO – Acid Soluble Oil • Water MHF Alkylation Unit Chemistry - cont. • 1994 Accepted Chemistry Yielding 65% ARF (all releases) • 1998 Accepted Chemistry • Baseline Process Conditions Yielding 50% ARF (unbarriered releases) • 89% ARF is achieved for barriered releases • The application of flange shroud, settler pan, and recirculation pump enclosure barriers result in a level of safety the same or better than that approved in 1994. Barrier Systems Flange Shrouds Barrier Systems Settler Pan Water Deluge System Airborne Reduction Factor (ARF) • Airborne Reduction Factor (ARF) is a measure of the reduction in the amount of HF that will go airborne (as a fraction of the total HF released) in an incident. • The larger the ARF, the less MHF is becomes airborne, and the lower the risk. • ARF is primarily driven by: • HF Concentration • Additive Concentration • Water Concentration • Temperature • ARF affects the severity (consequences) of a potential accidental release from the Alkylation Unit. • Continuous monitoring of these properties through ARF reports sent to TFD daily A Little Goes a Long Way • Many things in the life are non-linear. At the grocery store, a gallon of milk doesn’t cost 4 times the price of a quart. Nonlinearity can also apply to chemistry and physics. • For the Torrance Refinery Alkylation Unit, the additive’s protective features are non-linear. • Incremental safety benefits are greatest at lower concentrations. I.e., doubling the additive concentration does not double the safety improvement. • So, with respect to additive concentration, “a little goes a long way.” The first small percentages of additive have the most impact on ARF. This non-linearity is why the adjustment for operability in 1998 only reduced the ARF from 65% to 50%. How Does ARF Protect Me • MHF (1994) Original Additive Concentration MHF + Pressure + Temp = 65% ARF • MHF (1998) Revised Additive Concentration (unbarriered) MHF + Pressure + Temp = 50% ARF • MHF (1998) Revised Additive Concentration with Barriers MHF + Pressure + Temp = 89% ARF Societal Risk Index (SRI) • ARF is a “release behavior” property of MHF that is a mass of chemical properties and process conditions. • Societal Risk Index (SRI) is a measure of risk to the public – The lower the SRI, the lower the risk. • Measure risk as a function of severity and likelihood of impact to the Community • The MHF system is performing as designed and as approved by the Consent Decree • Whereas, ARF influences the severity of a release event, SRI pulls together all potential release scenarios that could be envisioned by the designers, operators, and the Safety Advisor to balance consequences and likelihood to determine risk. Societal Risk Index (SRI) • SRI is Influenced by numerous design and operational characteristics that include: • Process Chemistry • Process Temperature and Pressure • Number of Acid delivery Trucks • Momentum Reduction Barriers – Flange Shrouds, Settler Pans, Recirculation Pump Enclosures • Firewater Monitors/Deluge Systems • Acid Evacuation System (AES) • HF Detectors *TFD is notified if any of these elements are not fully functional, and immediate steps are taken to ensure the safety of public. Next Steps • Continue to monitor the refinery safety systems as designed • Continue to receive all compliance reports • Create a Refinery Community Safety Agreement • Summer 2017 - Strengthen the California Accidental Release Prevention Program (CalARP) and Process Safety Management (PSM) regulations Next Steps - Continued • The CalARP Program 4 requirements state that the refinery must evaluate Inherently Safe Technology (IST) and justify why application would be inappropriate. The City has the authority to contest, with reason, any justifications provided by the refinery as part of their Hazard Consequence Analysis (HCA). • Ability for City to direct the Torrance Refinery to evaluate the need for the application of an inherently safer technology (e.g., liquid ionic technologies being considered for other US refineries) Questions? TORRANCE ALERTS STAFFING INTERACTIVE COMMUNICATIONS OFFICE STATUS • $145,000 received for 5-year annual support from Torrance Refining Company was received on January 10th Office Creation • The second floor conference room in the Telecommunications Center has been converted into the Interactive Communications Office (ICO). • Most equipment has been installed (police scanner and call recorder ordered) Personnel • Job descriptions and exam created • Recruitment January 2 thru 13th, over 200 applications screened • Performance exam and oral panel being scheduled Training • In-house training will include social media, website, radio station, hotline messaging standards and methodologies • Everbridge (Torrance Alerts) will provide specialized training • Continued internal departmental coordination and training SCAQMD • Philip M. Fine, Ph.D., Deputy Executive Officer  Rule 1118 - Control of Emissions from Refinery Flares  Rule 1410 – Hydrogen Fluoride Storage and Use MOVING FORWARD REFINERY SAFETY AND ELECTRICAL RELIABILITY • Continue to meet with Torrance Refining Company • Continue monthly meetings with City, TRC and SCE COMMUNICATIONS • Promote and enhance Torrance Alerts public safety notifications • Update City’s website regularly www.TorranceCA.gov/Refinery • Continue work with TRC on community outreach on shelter in place campaign MOVING FORWARD ALTERNATIVE ALKYLATION METHODS • Continue to seek alternative models • Follow up with SCAQMD on community workshop to discuss Alkylation Technology Study (Norton Report) REGULATIONS • Monitor CALARP regulations implementation – expected July 1, 2017 • Cal Department of Industrial Relations (DIR) - Process Safety Management Regulations – 2017 • Participate in SCAQMD Rule Making Process PUBLIC COMMENT