Tesoro OKs two projects at Anacortes plant

Refiner Tesoro Corp. said Tuesday it will spend almost $400 million on two projects at its Anacortes, Washington, refinery.

San Antonio-based Tesoro said its board approved plans to spend $90 million on an isomerization project that will enhance its ability to produce clean projects and help it comply with expected regulations to reduce sulfur in gasoline. At the same time, the project will reduce the cost of producing gasoline, the company said.

In addition, Tesoro’s board gave a green light to a previously announced $300 million petrochemical project to make xylene.

Tesoro said in mid-2014 that it hoped to export the xylene it produced, primarily to Asia. Tesoro said then that the global market for xylene is growing by 5 to 7 percent a year and is driven mostly by demand in Asia.

Xylene is used to make polyester fibers for clothing and films for food packaging and beverage containers, the company said.

Making xylene will help the company diversify its product mix and would help boost its gross margins, Tesoro officials said last year.

The xylene project is expected to be complete in 2017, and the isomerization project in 2018. Both startup dates assume the required permits will be in hand.

“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,” CEO Greg Goff said in a statement.

The company noted that the xylene project may signal an expansion of the company’s trading activities in Asia. Also, it should increase the competitiveness of the Anacortes refinery and support additional growth in Tesoro’s Washington-based business.

In addition, Tesoro said the two projects “are expected to improve our capability to efficiently deliver both local transportation fuels and global feedstocks.”

In the projects’ construction phase, 500 workers will be added. At completion, about 20 jobs will be added.

Tesoro’s Anacortes refinery is one of three of West Coast plants it owns where workers represented by the United Steelworkers union have been on strike since Feb. 1. The union is on strike at a total of 11 plants across the country.

Bargaining talks are set to resume Wednesday.