UPDATE 1-Murphy Oil buys ethanol plant for $92 million

* Murphy Oil says will invest $15 mln working capital

* Plant has annual production capacity of 110 mln gallons

LOS ANGELES Oct 1 (Reuters) - A unit of Murphy Oil Corp (MUR.N) will buy a corn-based ethanol plant in North Dakota for $92 million, marking the company's first foray into biofuel manufacturing, the company said on Thursday.

Murphy Oil, based in El Dorado, Arkansas, said the deal will be financed primarily through non-recourse debt offered through the sellers.

The company plans to invest $15 million in working capital into the facility, which started production in July 2008, but has sat idle since October 2008.

The plant has an annual capacity of 110 million gallons.

Rising federal production mandates require 12.95 billion gallons of biofuel to be blended into the nation's fuel supply in 2010 and 36 billion gallons in 2022.

"Given the current ethanol mandates and our subsequent blending needs, having more of a presence in the supply chain better balances our business," said David Wood, chief executive and president of the company, in a statement.

Production at the plant, which is located near feedstock supply and transportation for the end product, should start "shortly," Wood said.

Murphy Oil shares closed down almost 3 percent at $55.90 on Thursday on the New York Stock Exchange. (Reporting by Laura Isensee; editing by Andre Grenon)