May 01, 1998 --- Vol. 4, No. 20May 1998

Tesoro to acquire Shell oil refinery in Washington

Tesoro Petroleum Corp. said May 1 that it has agreed to acquire the capital stock of Shell Anacortes Refining Co., an affiliate of Shell Oil Co.

The refinery, near Anacortes, Wash., has a capacity of 108,000 barrels per day. Combined with the company’s recent agreement to purchase The Broken Hill Proprietary Co. Ltd.’s Hawaii refinery and related operating assets, Tesoro said it will own and operate three West Coast refineries with a combined throughput capacity of approximately 280,000 barrels per day.

The third refinery is at Nikiski on the Kenai Peninsula.

Tesoro said it expects advantages from operating all three refineries in logistical savings, transportation of excess feedstock or products to areas that are in short supply, further processing of intermediate products, as well as marketing and operational savings resulting from having refineries close to its retail operations.

Tesoro said that the Anacortes transaction is expected to close this summer. The Hawaii transaction is expected to close this month.

“The Anacortes transaction solidifies our Pacific, marine orientation and makes us the second largest independent PADD V refiner,” Bruce A. Smith, Tesoro’s chairman, president and chief executive officer, said in a statement:

“The administrative, processing and logistical synergies between this refinery, our Kenai refinery, and the previously announced acquisition of BHP’s Hawaii refinery are expected to be significant — potentially greater than we can see today,” Smith said.

Alaska crude production down for April

April statewide crude oil production was down 1.71 percent from March, averaging 1.2 million barrels of crude oil per day and 56,000 barrels of natural gas liquids.

Production was below that forecast by the Alaska Department of Revenue division of oil and gas audit, which credited lower than expected production to the temperature, which averaged 24 degrees above the norm, and both scheduled and unscheduled maintenance at Prudhoe Bay.

The largest percentage drop was at Endicott, which produced an average of 53,826 barrels a day in April, down 16.5 percent from an average of 62,685 barrels a day in March.

Prudhoe Bay had the largest per barrel production drop, averaging 617,995 barrels a day in April, down 1.5 percent from an average of 627,253 barrels in March.

Kuparuk production averaged 256,004 barrels a day in April, down 2.69 percent from an average of 262,898 barrels a day in March.

Milne Point averaged 55,955 barrels a day in April, down 1.7 percent from an average of 56,921 barrels a day in March.

Lisburne, which processes oil from Point McIntyre, Niakuk and Lisburne as well as two smaller fields, saw the only increase in production, to an average 189,450 barrels a day, up 3.29 percent from March’s average of 183,223 barrels a day.

Cook Inlet dropped 2.6 percent, averaging 31,128 barrels a day in April compared to 31,922 barrels a day in March.

Alaska North Slope crude averaged 1,173,230 barrels a day in April, down 1.7 percent from a March average of 1,192,980 barrels a day. Statewide crude averaged 1,204,358 barrels a day in April, down 1.7 percent from an average of 1,224,902 barrels a day in March, and statewide crude and natural gas liquids production averaged 1,260,577 barrels a day, down 1.7 percent from an average of 1,282,392 barrels a day for March.

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