North Dakota's sole oil refinery at Mandan plans a two-week shutdown this month to bring online an expansion project that will bump the factory's capacity by 10,000 barrels a day, a petroleum marketing official said.
Mike Rud, president of the North Dakota Petroleum Marketers Association, said Tesoro Corp. officials notified fuel marketers this week that the plant would halt production in early June to launch the $35 million expansion. Tesoro said it will increase the refinery's output to 68,000 barrels a day. A barrel is 42 gallons.
Rud doesn't expect any fuel shortages during the outage.
"We're not overly concerned with the two-week shutdown," Rud said. "We feel pretty comfortable we have enough product to get us through this period."
Tesoro announced the expansion in March 2011 to capitalize on record production from the Bakken and Three Forks formations in western North Dakota. The San Antonio-based company said at the time that it planned to finish the project by the second quarter of this year.
"We are nearing the completion of our North Dakota refinery expansion," Tesoro spokeswoman Tina Barbee said Thursday. She would not comment on a shutdown or when it might happen, citing "understandable propriety and competitive reasons."
The refinery, which occupies about 1 1/2 square miles of land overlooking the Missouri River, was built in 1954, three years after drillers began pumping oil in North Dakota. Tesoro acquired the refinery from BP in 2001.
Crude is shipped via pipeline from the Williston Basin in Montana and North Dakota to supply the refinery, which converts it to gasoline, diesel, jet fuel, propane, butane and residual fuel.
The bulk of the refinery's products are shipped through pipelines to eastern North Dakota and Minnesota and sold to customers in the Dakotas, Minnesota and Wisconsin. Gasoline typically makes up about 60 percent of the refinery's production. About 80 percent of the diesel and 35 percent of the gasoline produced at the refinery stays in North Dakota, the company has said.
Work also is under way at the Mandan refinery to boost diesel production by 5,000 barrels per day, to 22,000 barrels by the end of 2013. That project, announced in December, is being done in response to growing diesel demand in the region, Tesoro said.
State Tax Department records show North Dakota's diesel fuel consumption has risen 51 percent since 2007, and the oil industry has since replaced agriculture as the biggest user of diesel in the state.
The Petroleum Marketers Association has estimated more than 1 billion gallons was used last year in North Dakota, largely powering the trucks and trains needed to move crude oil and materials in and out of the state's booming oil patch.
Separately, Tesoro's $60 million rail shipping project to move crude oil from western North Dakota to its refinery in Anacortes, Wash., is ahead of schedule, said Barbee, the company spokeswoman.
The project was expected to be completed late this year but may begin shipping 30,000 barrels daily by September, Barbee said. The project could be expanded to 50,000 barrels a day, she said.
Tesoro operates seven refineries in the U.S., with a combined capacity of about 665,000 barrels a day, Barbee said.