San Antonio-based Tesoro Logistics LP agreed this week to pay $400 million for pipelines and terminals in the Northwest.
The pipeline operator, an affiliate of locally based independent refiner Tesoro Corp., will acquire Chevron Pipe Line Co.’s Northwest Products System, which includes a 760-mile regulated pipeline from Salt Lake City, Utah, to Spokane, Wash., a five-mile jet fuel pipeline to the Salt Lake City International Airport and three refined product terminals in Idaho and Washington.
Tesoro Corp., which spun off Tesoro Logistics in 2011, announced the deal.
The company said the combination of the Chevron purchase with its existing terminals in the region will help lower overall costs and increase third-party revenue.
The deal is expected to close in the first quarter of 2013.
The terminals are located in Boise and Pocatello, Idaho, and Pasco, Wash., and have an overall storage capacity of 1.3 million barrels. Tesoro said the terminals are not subject to regulation by the Federal Energy Regulatory Commission.
The pipeline receives products from five refineries and one pipeline in the Salt Lake City area. Delivery volumes on the system averaged about 84,000 barrels per day last year.
For its part, Tesoro Corp. said it is exploring rail and tanker projects to move more oil to its California refineries from Canada and the Bakken shale play in North Dakota.
An unloading station at the Golden Eagle plant in Martinez, Calif., north of San Francisco, has been modified to receive 5,000 barrels a day of Bakken crude by rail, Tesoro CEO Gregory Goff said during an analyst meeting in New York.
The plant has the capacity to run between 30,000 and 50,000 barrels of light, sweet crude oil a day and could process more heavy Canadian crudes “without as much of an impact,” said Dan Romasko, the company’s executive vice president of operations.
Tesoro’s Anacortes refinery in Washington is already replacing feedstock with Bakken crude sent by rail to a station completed in September and with Canadian oil from Kinder Morgan Energy Partners LP’s Trans Mountain pipeline.
“Rail offloading facilities actually look like they might make sense in both Martinez” as well as Los Angeles-area refineries, Romasko said. “We expect to have greater clarity on what the best options to take advantage of these opportunities are by the middle of next year.”
In August, Tesoro announced it had agreed to pay nearly $2.5 billion to BP for a California refinery and related assets in a move that would make Tesoro the largest California refiner.
The deal would realign the state’s four largest refineries under the ownership of two companies, Tesoro and Chevron Corp. In California, Tesoro already operates a 166,000-barrel a day refinery at Martinez and a plant in the Los Angeles area. Tesoro also operates refineries in Washington state, Alaska, North Dakota and Utah.
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