Tesoro Corporation Announced Plans to Produce Petrochemical Feedstock

Tesoro Corporation announced plans to produce petrochemical feedstock in its U.S. West Coast refining system.  The Company intends to gather intermediate feedstock, primarily reformate, from its West Coast refining system for xylene extraction at Anacortes, Washington. 

The initial investment, estimated to be around $400 million, is designed to recover up to 15,000 barrels per day of mixed xylene.  The mixed xylene will mainly be exported to Asia and is used to make polyester fibers and films for clothing, food packaging and beverage containers.

The global xylene market is growing about 5% to 7% annually, primarily driven by demand in Asia.  Tesoro is well positioned as a supplier based on existing logistics and operating cost advantages.  "This attractive diversification of Tesoro's product mix supports our goals of enhancing our gross margin and investing in high return capital projects", said Greg Goff, Tesoro's President and Chief Executive Officer.

The project is expected to generate competitive returns similar to other strategic capital projects delivered by Tesoro in recent years.  Startup of the new facilities is expected to be in 2017, subject to permitting and the approval process.  A final investment decision is expected by year-end 2014.

Tesoro Corporation, a Fortune 100 company, is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates six refineries in the western United States with a combined capacity of over 850,000 barrels per day and ownership in a logistics business which include a 35% interest in Tesoro Logistics LP and ownership of its general partner. Tesoro's retail-marketing system includes over 2,200 retail stations under the ARCO, Shell, Exxon, Mobil,USA Gasoline and Tesoro brands.