Tesoro Logistics prospers despite North Dakota pipeline leak

SAN ANTONIO — Pipeline partnership Tesoro Logistics LP said Friday its net income rose 28 percent in the third quarter, although the company took a charge for crude-oil losses and remediation costs related to a September pipeline leak in North Dakota.

San Antonio-Tesoro Logistics said net income in the quarter climbed to $21.1 million, or 37 cents a unit, compared with net income of $16.5 million, or 54 cents a unit, for the year-earlier period.

Analysts as polled by Bloomberg news had expected Tesoro Logistics to earn 49 cents a unit in the quarter.

The company said it took a $4.9 million charge related to the leak on its High Plains Pipeline system that was discovered by a farmer in northwest North Dakota on Sept. 29.

The pipeline leaked 20,600 barrels of crude oil before it was discovered, North Dakota officials have said.

Tesoro Logistics restarted the pipeline Nov. 1 after the federal Pipeline and Hazardous Materials Safety Administration gave it permission to do so.

As a condition of the restart, the company agreed to make a number of safety improvements, including installing additional leak-detection equipment on the line, the federal agency said.

The pipeline leak “is unacceptable to us and we deeply regret the impact on the landowner,” CEO Greg Goff said in a statement. He said the company is focused on a cleanup of the area and on identifying the cause of the leak.

Revenue in the quarter rose to $93.8 million compared with $44 million for the year-earlier period. That exceeded analysts’ expectations of $83 million in revenue.

Tesoro Logistics attributed the higher revenue mostly to a full quarter’s contribution from logistics assets the partnership acquired from refiner Tesoro Corp. late in the second quarter after the refiner bought a Southern California refinery and logistics system June 1 from BP plc.

Tesoro Logistics is a master limited partnership that owns pipelines, storage, terminals and rail facilities.

San Antonio-based Tesoro Corp. partly spun off Tesoro Logistics in April 2011, and held a 40 percent stake as of Sept. 30, including a 2 percent interest in the general partner.