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Tesoro Corporation approves two new projects

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Hydrocarbon Engineering,

Tesoro Corporation has announced that its Board of Directors has approved two complementary projects to enhance clean products production at its Anacortes, Washington refinery. These include a US$90 million naphtha isomerisation project, which is designed to comply with upcoming reduced sulphur gasoline regulations while simultaneously reducing gasoline production costs, and the previously announced US$300 million mixed xylenes project, which upgrades and diversifies the value of the facility's product slate.

"Tesoro is pleased to announce this strategic commitment to our Anacortes facility and to the local community. These high-return capital projects are expected to produce cleaner fuels at a lower cost, while diversifying Tesoro's product mix and enhancing our gross margin," said Greg Goff, Tesoro's Chairman, President and CEO. The isomerisation project is expected to generate competitive returns of approximately 25% and the mixed xylenes project is expected to generate competitive returns of approximately 20%, both based on Tesoro's market outlook. Startup of the mixed xylene project is expected in 2017 and startup of the isomerisation project is expected in 2018, both dates subject to permitting.

These projects are expected to improve Tesoro’s capability to efficiently deliver both local transportation fuels and global feedstocks. The company expects multiple benefits to the state including increased tax revenue, positive local economic impact, and high-paying temporary and permanent jobs, which, at peak construction workforce, is estimated at 500 workers, with an ongoing permanent staff increase of approximately 20. According to the Washington Research Council, each permanent petroleum job adds US$880 000 per year of state personal income through additional employment and commerce.

On a global scale, the logistics-enabled Asian trade possibilities associated with the mixed xylenes project are quite significant, based on increased naphtha sales to Asia, reduced freight costs on shipments of valuable products from Asia to the US, and expansion of Tesoro trading activities in Asia. This aspect of the project should increase the competitiveness of the Anacortes refinery and support additional ongoing growth in Tesoro's Washington-based business.

Adapted from press release by Rosalie Starling

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