Full Description

Tesoro Corporation (Tesoro), incorporated in 1968, is an independent petroleum refiners and marketers in the United States with two operating segments: refining crude oil and other feedstocks at its seven refineries in the western and mid-continental United States and selling refined products in bulk and wholesale markets (refining) and selling motor fuels and convenience products in the retail market (retail) through its 879 branded retail stations in 15 states. Through its refining segment, the Company produces refined products, primarily gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils for sale to a variety of commercial customers in the western and mid-continental United States. Tesoro’s retail segment distributes motor fuels through a network of retail stations, primarily under the Tesoro Mirastar, Shell and USA Gasolinetm brands.

Refining

The Company owns and operates seven petroleum refineries located in the western and mid-continental United States and sell refined products to a variety of customers. Its seven refineries have a combined crude oil capacity of 665 thousand barrels per day (Mbpd). Tesoro purchases over 34% of its crude oil under term agreements, which are primarily short-term agreements priced at market. It purchases the remainder of its crude oil and feedstock supplies in the spot market. The Company processes both heavy and light crude oils. Refining yield represents produced volumes of refined products consisting primarily of gasoline and gasoline blendstocks, jet fuel, diesel fuel and heavy fuel oils. It also manufactures other refined products, including liquefied petroleum gas, petroleum coke and asphalt.

The Company term-charters four United States.-flag tankers and seven foreign-flag tankers to optimize the transportation of crude oil and refined products within its refinery system and secure shipping capacity. Tesoro operates refined products terminals at its refineries and 11 other locations in California, Washington, Alaska, Hawaii, North Dakota, Utah and Idaho. It also distributes products through third-party terminals, truck racks and via rail cars, in its market areas and through purchases and exchange arrangements with other refining and marketing companies.

Eagle refinery, located in Martinez, California on 2,206 acres about 30 miles east of San Francisco, has a total crude oil capacity of 166 Mbpd. It sources Golden Eagle refinery’s crude oil from California, Alaska and foreign locations. The Company operates refined products terminals at Stockton, California and at the refinery. It also distributes refined products through third-party terminals in its market areas and through purchases and exchange arrangements with other refining and marketing companies. It also leases third-party clean product storage capacity with waterborne access in the San Francisco Bay area. Its Los Angeles refinery, located in Wilmington, California on 311 acres approximately 10 miles south of Los Angeles, has a total crude oil capacity of 97 Mbpd. It sources its Los Angeles refinery’s crude oil from California,

as well as foreign locations.

The refinery also produces heavy fuel oils, liquefied petroleum gas and petroleum coke. Los Angeles refinery leases a marine terminal at the Port of Long Beach that enables us to receive crude oil and ship refined products. The Company operates a refined products terminal at the Los Angeles refinery and distributes refined products through third-party terminals in its market areas and through purchases and exchange arrangements with other refining and marketing companies. It also leases refined product storage tanks at third-party terminals in Southern California, the majority of which have waterborne access.

Tesoro’s Washington refinery, located in Anacortes on the Puget Sound on 917 acres about 60 miles north of Seattle, has a total crude oil capacity of 120 Mbpd. It sources its Washington refinery’s crude oil from Alaska, Canada and other foreign locations. The Washington refinery also processes intermediate feedstocks, primarily heavy vacuum gas oil, provided by some of its other refineries and by spot-market purchases from third-parties. Major refined product upgrading units at the refinery include the fluid catalytic cracking, alkylation, hydrotreating, vacuum distillation, deasphalting and naphtha reforming units. Washington refinery ships products (gasoline, jet fuel and diesel fuel) through a third-party pipeline system, which serves western Washington and Portland, Oregon. It also delivers refined products through its marine terminal to ships and barges. operates refined products terminals at Anacortes, Port Angeles and Vancouver, Washington, supplied primarily by its refineries. It also distributes refined products through third-party terminals in its market areas, and through purchases and exchange arrangements with other refining and marketing companies.

Alaska refinery is located near Kenai on the Cook Inlet on 488 acres approximately 70 miles southwest of Anchorage. Its Alaska refinery processes crude oil from Alaska and, to a lesser extent, foreign locations. The refinery has a total crude oil capacity of 72 Mbpd, and its refined product upgrading units include vacuum distillation, distillate hydrocracking, hydrotreating, naphtha reforming, diesel desulfurizing and light naphtha isomerization units. Its Alaska refinery produces gasoline and gasoline blendstocks, jet fuel, diesel fuel, heating oil, heavy fuel oils, liquefied petroleum gas and asphalt. Its 93.5 Mbpd Hawaii refinery is located in Kapolei on 131 acres about 22 miles west of Honolulu. It supplies the refinery with crude oil from Southeast Asia, the Middle East and other foreign sources. It distributes refined products from its refinery to customers through third-party terminals in its market areas. 58 Mbpd North Dakota refinery is located on the Missouri River near Mandan on 960 acres.

Its crude oil pipeline supplies its North Dakota refinery primarily with Williston Basin sweet crude oil. It operates a refined products terminal at the North Dakota refinery. It also distributes refined products through a third-party refined products pipeline system which connects to third-party terminals in Its market areas. Mbpd Utah refinery is located in Salt Lake City on 145 acres. The Utah refinery processes crude oils primarily from Utah, Colorado, Wyoming and Canada. Major refined product upgrading units include fluid catalytic cracking, naphtha reforming, alkylation and hydrotreating units. The Utah refinery produces gasoline, diesel fuel, jet fuel, heavy fuel oils and liquefied petroleum gas.

The Company sells refined products including gasoline and gasoline blendstocks, jet fuel, diesel fuel, heavy fuel oils and residual products in both the bulk and wholesale markets. The majority of its wholesale volumes are sold in 10 states to independent unbranded distributors that sell refined products purchased through its owned and third-party terminals. Its bulk sales are primarily to independent unbranded distributors, independent and other refining and marketing companies, utilities, railroads, airlines and marine and industrial end-users. These products are distributed by pipelines, ships, barges, railcars and trucks. Its sales include refined products that it manufactures, purchases or receives through exchange arrangements. It sells gasoline and gasoline blendstocks in both the bulk and wholesale markets in the western and mid-continental United States. It supplies jet fuel to passenger and cargo airlines at airports in Alaska, Hawaii, California, Washington, Utah and other western states. It also supplies jet fuel to the United States military from its refineries in Alaska, Hawaii, Washington, Utah, and North Dakota. It sells diesel fuel primarily on a wholesale basis for marine, transportation, industrial and agricultural use. It sells heavy fuel oils to other refiners, third-party resellers, electric power producers and marine and industrial end-users.

Retail

Through the Company’s network of retail stations, we sell gasoline and diesel fuel in the western and mid-continental United States. It sells gasoline and diesel fuel to retail customers through company-operated retail stations and agreements with third-party branded distributors (or jobber/dealers). Its retail network provides committed outlet for a portion of the motor fuels produced by its refineries. Many of its Company-operated retail stations include convenience stores that sell a variety of merchandise items. As of December 31, 2008, its retail segment included a network of 879 branded retail stations (under the Tesoro, Mirastar, Shell and USA Gasolinetm brands). Its Mirastar brand is used exclusively at 34 Wal-Mart stores in nine western states under a long-term agreement. It also operates under the Shell brand at certain stations in California through a long-term agreement and owns the exclusive rights to the USA Gasolinetm brand in California, New Mexico and Washington.