Putting Union Employees Back to Work

Overview:

• Reopened a shuttered petroleum refinery with a processing capacity of 190,000 barrels per day.
• Saved 500 union jobs, up to 400 contract jobs and likely to generate approximately 2,000 indirect jobs at local suppliers and service providers.
• Invested $670 million to reopen and improve the performance and reliability of the Delaware City refinery.
• Estimated reduction in carbon dioxide emissions by as much as 35%.
• Building one of the largest independent refiners in the U.S. with a total processing capacity of 540,000 barrels per day across three refineries.
• PBF has invested nearly $547 million to date in operational improvements across its three refineries.

A Turnaround Story

The Delaware City Refinery was purchased by Blackstone portfolio company, PBF Energy Company LLC (“PBF”), from the Valero Energy Corporation in June 2010. The plant was shut down by Valero in 2009 and the majority of its employees terminated. With Blackstone’s operational support and growth capital, PBF has since undertaken a full turnaround of the Delaware facility, saving hundreds of jobs and investing more than $450 million to date to improve the performance and reliability of the Delaware City refinery. As a part of this effort, PBF has decommissioned the Refinery’s gasifier unit, which is expected to reduce carbon dioxide emissions by as much as 35% and improve the overall reliability of the refinery. As a result of the upgrades implemented by PBF, Delaware City is one of the largest refineries on the U.S. East Coast with the capability of processing heavy crudes.

Hundreds of Jobs Saved – Thousands more Potentially Created

PBF’s reopening of the Delaware City refinery lead to the rehiring of approximately 500 full-time union employees and up to 400 contract services employees while generating nearly $100 million per year in state and local tax revenues. The company worked closely with the U.S. Steelworkers throughout the process and the union praised Blackstone and PBF for their efforts.

In a letter written to Blackstone President and COO Tony James, Leo W. Gerard, International President of the United Steelworkers Union said: “Our union membership and the community deeply appreciate the fact that Blackstone and PBF Energy stepped forward and were willing to put hundreds of millions of dollars at risk when no one else was willing to do so. We also appreciate the proactive and forthright way in which your management team at PBF Energy dealt with the United Steelworkers, the State of Delaware and related constituencies to forge a partnership together to execute the purchase agreement with Valero Refining and revitalize this critical facility”.

A study on the economic impact of the refinery conducted by the Department of Economics at the University of Delaware concluded that in addition to the union jobs saved, approximately 2,000 additional jobs in input producing industries such as building maintenance, wholesale trade, and trucking could be created by the reopening of the facility, having a wide impact on the Delaware community.

Building one of the Largest Independent Refiners in the United States

In early 2008, Blackstone, together with Petroplus and First Reserve Corporation, formed PBF Energy to acquire and operate petroleum refineries and related assets in North America on behalf of investors. Blackstone spent two years building a management team with the skills necessary to assemble and operate a leading refining platform. Blackstone has substantial prior experience as an owner of petroleum refineries, having acquired Premcor in 1997 and overseen several acquisition and capital projects to expand and upgrade refining capacity of that company, until its acquisition by Valero in 2005.

The acquisition of the idled Delaware City Refinery was PBF’s first investment. The company then acquired two additional refineries in Paulsboro, New Jersey (December 2010) and Toledo, Ohio (March 2011). The combined processing capacity of the three facilities is 540,000 barrels per day, making PBF one of the largest independent refiners in the United States. The Delaware City and Paulsboro refineries are strategically located on the East coast of the U.S. and have the capability to process heavy foreign crudes. The Toledo refinery is a light/sweet refinery well positioned to capitalize on increasing crude production from Canadian oil sands.

Initiating Major Improvements

PBF is providing significant growth capital for a number of value enhancing initiatives across its three refineries and nearly $547 million has been invested to date.

PBF successfully re-started operations at Delaware City in June 2011. More than $670 million has been invested so far, including over $30 million to convert the 218MW on-site power plant, which provides power to the refinery, from diesel fuel to less costly and more efficient natural gas. PBF is also in the process of re-starting the hydrocracker unit, which increases the production of more valuable products such as gasoline, jet fuel and diesel oil. Delaware City is currently processing approximately 160,000 bpd of crude oil and it is expected that total crude will increase by approximately 5 percent after the hydrocracker is fully operational.