San Antonio-based refiner Tesoro Corp. said Friday it will spend $50 million to boost its delivery of North Dakota Bakken shale crude oil to its Anacortes, Wash., refinery.
The improvements will boost delivery of Bakken crude to as much as 30,000 barrels a day from the 1,000 to 2,000 barloading rels a day the plant receives now.
More Bakken crude will make up for declining Alaska North Slope production and replace more costly imported oil Tesoro must buy for the plant, the company said.
“The primary benefit to Tesoro is the lower feedstock cost by railing it to their refinery in Anacortes,” said Stacey Hudson, research associate at the Houston office of Raymond James & Associates.
To accommodate the boost in crude from the Bakken shale, Tesoro will build an unfacility for the oil at the Anacortes plant.
Once Tesoro secures permits, construction of the unloading area will take nine to 12 months. When the Anacortes rail project is completed, it will be offered to Tesoro Logistics LP, a Tesoro subsidiary and master limited partnership formed this year.
Tesoro also said Friday it signed an agreement with Sugar Land-based Rangeland Energy LLC that grants Tesoro access to Rangeland’s crude-oil loading terminal and pipeline facility in North Dakota. The Rangeland facility will have a direct connection to Tesoro Logistics’ High Plains crude oil pipeline system and will be in service in the first quarter of next year.
The train will allow Tesoro “to leverage our advantaged logistical position in the Bakken as well as provide a high quality, lower cost feedstock supply to the refinery,” Tesoro CEO Greg Goff said in a statement.
Lowering the cost of crude oil remains a strategic priority for the company, Goff said.