April 22, 2013 / 9:56 PM / 5 years ago

UPDATE 2-Tesoro, Savage Cos plan venture to move crude to US West Coast

By Kristen Hays

HOUSTON, April 22 (Reuters) - Independent refiner Tesoro Corp and supply system provider Savage Companies will build a new crude-by-rail and marine offloading facility in southwest Washington State to help move cheap North American crude to West Coast refining centers, the companies said on Monday.

The crude would come from “advantaged North American sources” - such as North Dakota’s Bakken shale oil play and Canada - and the project will let Tesoro ship it to its three West Coast refineries, a Tesoro spokeswoman said.

The facility at the Port of Vancouver, Washington, with an initial capacity of 120,000 barrels-per-day (bpd) and expandable to 280,000 bpd, is the latest in a series of moves by West Coast refiners to tap cheap inland U.S. and Canadian crude already run by their peers in other regions.

The $75 million to $100 million facility is expected to be operational in 2014, pending regulatory approvals.

Last year Tesoro started up a new offloading facility at its 120,000 bpd refinery in Anacortes, Washington, about 244 miles north of Vancouver, and began railing in 40,000 bpd of North Dakota Bakken crude.

The company also is processing up to 5,000 bpd of Bakken crude at its 166,000 bpd refinery in Martinez, California. The Martinez refinery would need an offloading facility as well to bring in more crude via rail, similar to the levels at Anacortes.

However, Martinez and Tesoro’s 103,800 bpd refinery in Wilmington receive waterborne crude imports. The new facility would be able to receive U.S. and Canadian crude by rail and then move it on the water to the California refineries.

Tesoro is awaiting regulatory approval of its $2.5 billion bid to buy BP Plc’s 265,000 bpd refinery in Carson, California and related assets, including pipelines and three marine terminals.

Tesoro Chief Executive Greg Goff called the project with Savage Cos the “ideal next step” in gaining cost advantages through cheaper crudes at its remaining West Coast refineries.

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