The Associated Press March 21, 2011, 1:58PM ET

Tesoro plans $35 million expansion of ND refinery

Tesoro Corp. announced Monday that it plans to increase capacity at its North Dakota refinery by 10,000 barrels a day, partly because of record production in the rich Bakken shale and Three Forks formations in the western part of the state.

The cost of expanding the Mandan factory to be able to handle 68,000 barrels a day is pegged at $35 million, with the project is slated to be complete by April 2012, the San Antonio-based company said.

"From our perspective, this is a no-brainer ... an opportunity to fully utilize our assets," said Tesoro spokesman Mike Marcy. "We believe we will continue to see growth in Bakken production and we see our refinery in a uniquely advantaged location."

The facility, built in 1954, is the only refinery in North Dakota. It is supplied with crude via pipelines from the Williston Basin in Montana and North Dakota.

Tesoro said it refined an average of 52,000 barrels a day over the last three years at the Mandan refinery, converting Williston Basin crude into gasoline, diesel, jet fuel, propane, butane and residual fuel.

The company acquired the refinery from BP in 2001. Including the planned expansion, Tesoro will have invested more than $135 million in environmental and production upgrades since then, Marcy said.

Tesoro said the bulk of Mandan refinery's products are shipped through pipelines to eastern North Dakota and Minnesota and sold to customers in the Dakotas, Minnesota and Wisconsin. Gasoline makes up about 60 percent of the refinery's production on average. About 80 percent of the diesel and 35 percent of the gasoline produced at the refinery stays in North Dakota, the company said.

Tesoro announced last week that repairs to a gasoline-making unit damaged by a fire nearly two months ago at the refinery were completed and the Mandan facility is running at full capacity. The company had said the Jan. 19 blaze cut production at the plant by about 10 percent, though the refinery provided an adequate amount of fuel products to its customers.

Tesoro operates seven refineries in the U.S., with a combined capacity of about 665,000 barrels a day.


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