Update:
Lives at risk in Torrance.CA Refinery and the surrounding
area: 255,524 people.
Radius of exposure 3.2 miles.
June 20 - Reuters - Exxon Torrance crane collapse shakes refinery operations, sale: sources
Today: 1 killed, 3 hurt in oil well explosion in North Dakota (XTO Energy is a subsidiary of ExxonMobil)
Now that you know what is happening with ExxonMobil, here is the PBF Energy's history.
The
Story of Tom O'Malley
by Dave Lincoln & Melinda Pillsbury-Foster
 |
| O'Malley - On first for profits |
Tom O'Malley is making his exit
from a stage where he has occupied the central role in an ongoing
scheme to convert aging refineries into explosive sources of profits
for himself and his team. This month, the last of the corporate
shells he used to move the action along, PBF Energy, is about to
acquire Exxon's Torrance Refinery, located near enough to downtown
Los Angeles to allow the potential explosion from the refinery to
light up the sky at the Los Angeles Court House.
In June
2016, PBF will, presumably, add to its stable of four aging
refineries with the acquisition of the EXXON Torrance Refinery for a
half Billion dollars. This 85-yr-old, trouble-plagued refinery is one
of the most dangerous industrial facilities in any major metropolitan
area in the United States. For the reasons documented for the first
time in this report, we must stop this sale and shut down this plant
to prevent a catastrophe in the Los Angeles area.
The untold
story of dangerous and neglected refineries could impact the health
and safety of 15 million Americans. This twisted and bizarre saga is
centered around PBF Energy and the self-proclaimed king of refineries
with the Midas touch, Thomas D. O’Malley.
It all
started with TOSCO, a company started by an eccentric
multi-millionaire,
In 1965,
TOSCO sold part of its Oil Shale project to AMOCO for more than $20
million and began its foray into the refinery industry to build out a
ready source of income. First TOSCO bought the Bakersfield Refinery
from Signal Oil. In 1970, it bought the Avon Refinery in the San
Francisco Bay Area from Phillips. Then, in 1980, TOSCO bought the
Oklahoma Refinery from Sunoco for $140 million.
That same
year, Arco sold its interest in the oil shale project to EXXON for
$360 million and TOSCO sold its 40% interest in the oil shale to
EXXON for $300 million. Now, Exxon owned nearly the whole operation
and after spending a Billion dollars, EXXON decided they wanted to
terminate the effort.
Probably
to their chagrin, EXXON discovered the contract required them to
purchase TOSCO's interest in the oil shale because TOSCO did not have
the money to pursue development on their own. There it was, in the
contract in black and white. It was like playing musical chairs with
a hot potato where the last person standing got stuck with the
burning potato and had to pay off all the other players. Exxon was
left with the steaming potato.
It was the
perfect outcome for TOSCO since the project was never going to be
economic under any reasonable scenario and they were in desperate
need of cash. At that time, it was estimated that the project would
need a minimum of $5 Billion just to become operational.
So, on May
2, 1982, EXXON terminated the jobs of more than 2000 employees in the
area which locals still call “Black Sunday”. During it’s nearly
20-year history the entire project had produced about a quarter
million barrels of shale oil worth less than $500,000 dollars. It
was a total economic disaster.
The
following year, TOSCO bought Arizona Land Resources (AZL Res) for $85
million, a company involved with oil and resort developments in
Arizona and Colorado. The CEO of AZL Resources at the time was the
enigmatic oilman and UN Diplomat, Maurice Strong. Strong eventually
paid over $4 million for fraudulently hyping the stock value of AZL,
but he ended up owning the 150,000 acre Baca Ranch in Colorado and
TOSCO was left with little of their investment.
TOSCO
closed their Oklahoma Refinery just 3 years after purchase. The
Oklahoma Dept. of Environmental Quality declared the Oklahoma
Refinery contaminated and named TOSCO as a principal responsible
party. TOSCO defaulted on some of their loans and continued to
sell-off assets. At this point they 'understood' that contaminating
people, air, land and water was unacceptable. By 1986, they sold
their Bakersfield refinery to Texaco for $22 million.
This was
the same, fateful year Thomas
D. O’Malley entered the picture. He formed Argus Resources,
an oil and gas production company. This ultimately became a
family-owned empire made up of Argus Energy LLC, Argus Investments
Inc., Argus Development LLC and many other companies based in
Connecticut.
Until now,
we have followed one company. Now, we will watch, as if by magic,
this one company sheds identities while keeping its essential persona
and new business plan intact. The skin means nothing, it is the persons inside who making the decisions. You will need the O’Malley CEO
timeline to follow the metamorphosis and understand what is happening
as Tom O'Malley provides essential services to the oil industry and
becomes wealthy beyond his wildest dreams.
The
Buying Spree
In 1987,
Thomas O’Malley and Argus
Energy bought 26% of TOSCO and COMFED BANKCORP
in Massachusetts. This mortgage lending company was a dubious
investment. Along with indictments for fraud on January 15 1988, a
COMFED VP, Elizabeth Bourne-Johnson, was found fatally shot in the
head in the trunk of her car in South Boston Mass, not a fate
generally associated with the banking industry. The same year,
O’Malley purchased 40% of
TOSCO and became Chairman of the COMFED S&L from 1988 to 1989; at
which time he became Chairman and President of TOSCO
and moved the headquarters to Connecticut.
Another
brutal murder had occurred in Boston about then. Bookie, John
McDermott was fatally shot in the head in front of his son who was
seriously injured. The son testified that the killer was William
“Billy” Barnoski, the enforcer for James “Whitey” Bulger.
Bulger was the mob boss, FBI informant and for 15 years their most
wanted fugitive who was linked to at least 19 murders and was known
to have operated in South Boston during the time the VP was murdered.
It has
been speculated that someone in COMFED management who knew Whitey
Bulger had Elizabeth Bourne-Johnson silenced because she knew too
much about their policies or finances. No suspect was ever named.
By 1990,
COMFED Savings Bank had its
assets seized in Wakefield. The largest mortgage lender in New
England was declared insolvent on Dec. 17th due to massive fraud.
More than 30 managers and employees were arrested and charged with
fraud and perjury including the bank’s lawyer.
The
Hartford Courant reported that three banks in Connecticut acquired
over $500 million in insured deposits for a discounted price of $1.5
million. Elizabeth Bourne-Johnson's murderer was never identified.
Now firmly
under the control of Tom O'Malley, Tosco begins a new lease on
corporate life. It goes without saying that O'Malley must have had a
reason for buying an interest in these companies. We can bet he made
a profit on Comfed Bancorp before it was declared insolvent – but
the only assets associated with Tosco at the time was two problematic
refineries.
Since
O'Malley is a clever, guy he had to have his reasons for wanting the
moribund and dangerous refineries which you will see illustrated
below. He could have found a way to profit from insurance claims and
tax deductions. But the accumulation of wealth for reasons not in
evidence was obvious.
The
company was about to experience an explosion in profits as the
refineries themselves blew up.
The
Shuffling Begins:
1986 –
O'Malley incorporates ARGUS Investments - is CEO.
1987 -
ARGUS Energy buys 26% of Tosco and Comfed Bancorp for – how much?
1988 –
December 1 - O'Malley becomes CEO of Comfed Bankcorp
1988 -
ARGUS Energy buys 40% of Tosco.
1989 –
O'Malley becomes CEO of Tosco
1992 -
TOSCO acquires EXXON Bayway Refinery, Linden, NJ for $175 million.
1993 -
TOSCO acquires Ferndale Refinery- Washington State from BP.
1996 -
TOSCO buys UNOCAL’s western operations for $1.3 Billion. Transfers
of control will take place over several years.
This
included: over 2500 Union 76 gas stations and Circle K stores and 7
Refineries.
The
Magnificent Seven
The Los
Angeles Refinery ("LAR") System, consisting of two linked
refineries located in: Carson (built in 1923)
1996 –
TOSCO acquires Wilmington Refinery, CA (built in 1919) from Unocal.
1996 –
TOSCO acquires Trainer Refinery - is shutdown - restarted May 1997.
1996 –
TOSCO acquires Rodeo Refinery (built in 1896) San Francisco Bay area,
and
1997 -
TOSCO acquires Avon Refinery, (built in 1915), Martinez, CA.
1997 -
TOSCO acquired Santa Maria Refinery (built in 1955).
At the
time of this purchase Avon, Rodeo and Wilmington Refineries had each
experienced at least three fire and/or explosion incidents.
At this
point, you might well ask “How did TOSCO, a struggling production
company, get a bank to loan them more than $1 Billion to buy
refineries more than 75 years old?” This is the essence of
O’Malley’s strategy.
The
inflated value of the assets was used as collateral on the loans. He
convinced the banks, some of which he controlled, that the refineries
were worth their replacement value rather than their actual
depreciated value. To maintain this deception, all he had to do was
to demonstrate how many barrels per day of products these old
facilities could produce and that they could still operate at a
profit. This dictated that every refinery purchased would be pushed
to its maximum capacity and operating costs would be kept to the
minimum. Thus by delaying maintenance and cutting personnel to the
bone, TOSCO could maximize profit and use the new assessed value to
justify larger loans and purchase more distressed refineries.
The
fallacy of these arguments was tragically revealed on January 22,
1997, when TOSCO’s Avon Refinery caught fire and a pipe blew up
killing one worker and injuring 46. TOSCO waited more than a week to
report the actual number of injured meanwhile continuing to operate
the units not directly impacted by the blast. TOSCO responded by
buying the nearly 100-yr old Marcus Hook, PA Refinery from BP for
$235 million dollars that same year. Why would a company expend money
on further purchases when the refineries they owned needed repair and
maintenance?
Then on
February 23, 1999 the TOSCO Avon Refinery blew up again; killing 4
and seriously injuring one worker. This time, Thomas O’Malley, CEO
of TOSCO apologized in person. The subsequent Chemical Safety Board
(CSB) investigation found that the company attempted to replace a
pipe in a 150 ft. tall fractionating tower while the unit was still
operating. One surviving employee stated that plant managers had
refused a request from oil workers to shut down the high temperature
unit during repairs which ultimately spilled hot Naphtha on to the
employees burning them to death. The CSB concluded the incident
"could have been prevented by better management supervision of
safety". The same year, TOSCO reported a fire at its Wilmington
Refinery.
On
February 29, 2000, TOSCO acquired and began operating an additional
system of 1,740 gasoline and convenience outlets from EXXON. As a
result of this purchase, TOSCO became one of the nation's largest
operators of company-controlled convenience stores. Also, during that
year, two more fires occurred at the TOSCO Avon Refinery; each time
injuring another two workers. In addition, TOSCO reported a fire at
its Rodeo Refinery.
In 2001,
on the strength of TOSCO stock and its refining and marketing assets,
Phillips paid $7.3 Billion in
stock for TOSCO while assuming
over $2 Billion in debt. O’Malley
becomes Vice Chair and largest stockholder of Phillips.
In 2002,
CONOCO merges with Phillips. O'Malley is not included in this
corporate makeover. Instead,
O’Malley becomes CEO of PREMCOR;
a company that changed their name from Clark Refining Group after it
was taken over by Blackstone Investments. The company’s main asset
was the Clark Oil Refinery (built in 1943) on Blue Island near
Chicago, Illinois. This refinery had already been plagued with
problems including a fire in 1994 which resulted in an infamous toxic
dust release. The dust forced the evacuation of a nearby high school,
the hospitalization of 48 students for respiratory distress and an
eventual PREMCOR $120 million settlement which involved 4000
residents.
This was followed a year later by a fire at the same
refinery which killed two workers and injured 3 others and resulted
in an out-of-court settlement of $12 million to the victims and their
families.
Also in
2002, PREMCORP closed the Clark Refinery and paid the EPA $6.2
million in fines for environmental violations.
PREMCORP,
now with O’Malley at the helm, responds by purchasing the
60-year-old Williams Refinery (built in 1941) in Memphis, Tenn. for
$455 million. O’Malley characteristically moves PREMCORP
headquarters from St. Louis, MO to Greenwich, CT. It then acquired
two other small refineries, located in Lima, Ohio and Hartford,
Illinois. Three more purchases of refineries.
By 2004,
PREMCOR bought Saudi Shell Motiva Refinery in Delaware City, NJ for
$900 million. The following year VALERO,
one of the nation’s largest petroleum retailers, paid $7.4 Billion
for PREMCORP.
In May
2006, O’Malley joined
PETROPLUS as CEO. At the time,
the company was an international refiner based in Amsterdam with
three relatively small refineries. They owned one each in 3
countries; Belgium, Switzerland and the UK. Over the next 2 years,
O’Malley led PETROPLUS
through the purchase of five more large European refineries at a
total cost of more than $3 Billion becoming Europe’s largest
independent refiner.
In 2008,
Thomas O'Malley formed and
became Chairman of PBF with
financing from PETROPLUS,
Blackstone
Investments and First
Reserve Bank.
In 2009,
the PETROPLUS Ingolstadt Refinery in Germany catches fire. Also,
VALERO closes the Delaware City NJ refinery permanently as a cost
cutting measure. VALERO acquired it from PREMCORP in the takeover and
was forced to take a write-down. In the previous 5 years, the
Delaware City refinery had experienced 2 major fires resulting in a
total of 2 deaths and 10 injuries.
In 2010,
PBF bought the shuttered Delaware City Refinery from VALERO Energy
for $ 220 million and the Paulsboro Refinery for $360 million. PBF
also bought the Toledo Ohio from Sunoco for $400 million. PETROPLUS
sells its interests in PBF for $ 90 million and reports annual
revenues of $20 Billion that
year. O'Malley is taking his purchases with him as he changes skins.
At the end
of 2011, the bank lenders froze the PETROPLUS $1 Billion credit line.
Amazingly, PETROPLUS lost 9 Billion between 2007 and 2011 when
O’Malley resigned as Chairman. On January 12. 2012, the company
became insolvent when it
defaulted on nearly $ 2 Billion on bonds and notes. O’Malley
responded by taking PBF public with a $500 million IPO.
Also in
2012 the Memphis Refinery which VALERO acquired in the PREMCORP
takeover caught fire and exploded. One employee was killed and two
others were injured.
The year
2015 was an exciting one for O’Malley and PBF. In February, the
Paulsboro Refinery (which the company acquired from Tesoro just four
years before) exploded killing one worker. This was followed by two
separate fires at the Delaware City Refinery, the same facility that
PBF had taken out of mothballs after VALERO closed it 5 years
earlier. PBF responded with the purchase of the 100-yr-old Chalmette,
LA Refinery (built in 1915) from EXXON and the Venezuelan National
Oil Company (PDVSA) for $322 million.
O’Malley
was reportedly rewarded with a $8.3 million annual salary. Why would
exploding refineries be viewed as assets?
The
Tenneco Chalmette Refinery was notorious for years (as the author can
personally attest while an employee of Tenneco) after a horrific
explosion occurred in 1976 in which 12 people were tragically killed.
The men were welding inside of a 30-story tower when apparently a gas
leak blew the top off the tower and all of the metal above collapsed
on the workers. One doctor reportedly said “their clothes were
blown off and many are barely recognizable as human”. The explosion
was felt as far as two miles away.
Under
Tenneco, there was also a Chalmette Refinery fire in 1983 which
resulted in the death of two workers with 28 workers and firefighters
injured. In 2010, when EXXON was the operator, another fire broke out
which led to one worker’s death.
And Back to Torrance
In 2016,
PBF intends to purchase the “troubled” EXXON Torrance, CA (built
in 1929) for $537.5 million. Let's think about this for a moment.
EXXON had
recently been fined over $ 500,000 for workplace health and safety
violations pertaining to a major explosion and fire in February 2015
which dispersed catalytic dust up to a mile from the refinery. The
CSB investigation revealed multiple process safety management
deficiencies and inadequate hazard analysis which contributed to the
incident.
The event was described as a “near miss” when a 15-ton
piece of debris was thrown 100 feet and just avoided a tank
containing thousands of pounds of modified hydrofluoric acid. A
release of acid vapor could pose a threat of serious injury or death
to the population exceeding 300,000 people within a 3-mile radius. In
addition, there has been concern about the ability of these
hydrofluoric acid tanks to withstand a major earthquake without
rupturing. EXXON denied that there was any significant threat
consistent with their previous claims.
Wouldn't
these facts make most people more cautious?
Following
a 1989 hydrofluoric acid spill, the city of Torrance sued EXXON to
convert the HF process to a safer alternative. EXXONMobil in Torrance
and Valero in Wilmington are the only 2 refineries in CA that use
toxic and volatile hydrofluoric acid (HF). EXXON argued that they
could not make the change because it was too expensive. Instead they
proposed their own proprietary formula for a 30% additive which was
tested to reduce vapor formation.
Subsequently,
to cut costs they reduced the additive to 10% without independent
testing. Thus we do not know if the current formula for Modified HF
(MHF) actually works.
Of all the
refineries mentioned in this article, the Torrance Refinery is the
epitome of a “fire trap”.
Since 1979, the Torrance Refinery has reported no fewer than 18
significant incidents of leaks, fires and/or explosions which have
resulted in a total of 8 deaths and 74 injuries.
This total does not include the 2500 citizens who sued EXXON for
damages after a mist of greasy oil fell on their property following a
pipeline explosion in 1984. Also the refinery has been emitting over
100,000 pounds of Ammonia per year since 1999 averaging over a
million pounds of Ammonia per year between 1996 and 2007. Alarmingly,
it has emitted nearly 100,000 pounds per year of toxic hydrogen
cyanide from 2011 until 2014, the last year for which data is
available.
For these
reasons, PBF has stipulated that EXXON must operate the Torrance
Refinery without problems continuously for 15 days before the company
will complete the sale. Although the plant was finally restarted on
May 10, 2016. Some modifications have been made and the clock has not
yet been restarted for the sale to continue.
On May,
27,2016, Thomas D. O’Malley
announced his retirement from PBF effective at the end of June 2016.
Coincidentally his son Todd O’Malley resigned as President of PBF
Logistics earlier to assume the role of President of Gulf Oil in
Framingham, MA. This struck us as a curious coincidence since we had
published our first article about PBF not long before the
announcement was issued.
And on
June 20th,
a 300-ton Crane collapsed, narrowly missing the cracking unit, which
was operating at the time. This was another near-miss – but the
refinery continues to operate while the clean-up goes on. This,
historically, is the time when most explosions or other 'incidents'
take place.
Our advice is – Close Exxon-PBF Torrance Refinery down
now before, not after, the next 'accident.'
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