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Tesoro outline expansion plans at NPRA meeting

Hydrocarbon Engineering,

San Antonio based Tesoro Corp, the largest independent refiner on the US West Coast, is interested in buying plants in the Midwest and western US as the refining industry consolidates. The company currently operates seven North American refineries that can process about 694 000 bpd of crude.

CEO Gregory Goff outlined the plans in an interview at the National Petrochemical and Refiners’ Association meeting in San Antonio on March 21:

‘The East Coast is not a part of the business that fits us, the Gulf Coast really doesn’t fit us, so that kind of leaves the rest of the country from the mid continent to the West as potential opportunities.’

Recently, oil companies (including BP and Murphy Oil Corp) have announced plans to sell refineries to focus on production. The capacity for sale in the US could reshape the independent refining industry as companies attempt to acquire those assets, Goff said.

The two BP plants for sale in Texas City, Texas, and Carson, California, exceed the total capacity of Tesoro’s current network, with the ability to process a combined 741 000 barrels of crude oil daily.

The most likely acquisition target for Tesoro would be a refinery in the Rocky Mountains, said Ann Kohler, an analyst at CRT Capital Group in Stamford, Connecticut.

However, the company could face difficulties attempting to buy BP’s Carson plant due to potential antitrust concerns due to the fact that the company already owns two California refineries. Other refineries for sale in the Midwest, such as Murphy’s Superior, Wisconsin, plant, would not be attractive because the company does not have retail capabilities there, Kohler said.

The company has also unveiled plans to invest US$ 35 million to expand crude oil throughput capacity from 58 000 bpd to 68 000 at its refinery in Mandan, North Dakota by the second quarter of 2012.

The company intends to supply the plant with additional crude oil from the crude oil production in the nearby Bakken Shale/Williston Basin area through the Tesoro High Plains Pipeline system.

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