U.S. refiner Tesoro and supply system provider Savage Cos. have rolled out a joint venture to build and operate a 120,000-barrels-per-day crude-by-rail unloading and marine loading facility on the Washington State coast to deliver Bakken oil to West Coast refineries.
The partners believe their plan, which needs approval by commissioners at the Port of Vancouver near Portland and regulatory agencies, could cost up to $100 million, be operational in 2014 and eventually get expanded to 280,000 bpd.
Wells Fargo analyst Roger Read said the ultimate capacity could position the port as a hub for North American crude deliveries and make it the “preferred supplier of Bakken crude to ... California.”
He said Tesoro’s two existing California refineries, plus a 265,000 bpd facility at Carson, Calif., that Tesoro has agreed to buy from BP, can process up to 190,000 bpd of Bakken-type crudes.
Macquarie analyst Chi Chow said the joint venture would likely result in Tesoro swapping California heavy, waterborne Alaska and foreign crudes in its West Coast system for Bakken or Canadian heavy crudes.
Tesoro Chief Executive Officer Greg Coff said the project builds on the success of a 50,000 bpd rail unloading facility at the company’s 120,000 bpd Anacortes, Wash., refinery which has received Bakken crude by rail since last year.
“This is the ideal next step for Tesoro as we drive additional feedstock cost advantage to the remaining refineries in our West Coast system,” he said.
The Anacortes facility has already backed out about 40,000 bpd of Alaska North Slope and foreign crudes, the company said in a February conference call.