Tesoro targets more Canadian crude oil for US West Coast refineries


Tesoro Corp. is looking for ways to bring more Canadian crude oil to its West Coast refineries via rail cars or barges in a plan that might ultimately affect Alaskan oil exports, CEO Greg Goff said Thursday.

Tesoro has been aggressive in expanding its crude-oil sources as a way to bring down costs at its refineries along the West Coast, home to the vast majority of its operations. Tesoro and other US refiners have been steadily increasing their use of a domestic oil supply strongly bolstered by recent developments in drilling technology.

San Antonio-based Tesoro could use barges to bring heavy Canadian crude oil to the US Pacific Northwest and then ship the crude oil via rail to its California refineries, Mr. Goff said.

West Canadian crude oil is heavily discounted because a lack of pipelines keeps it from easily reaching markets, creating a supply glut.

As more of it travels via rail or barge to the West Coast -- home to 17% of the total US refining capacity -- the consumption of Alaska North Slope crude oil in that region could start to decline, Mr. Goff said. That, in turn, could lead to ANS crude oil being exported abroad, an analyst from Tudor Pickering Holt & Co. noted.

ANS crude oil is one of the few exceptions to the US ban on crude-oil exports.

"It depends on the amount of crude available to the West Coast but it could have an impact with ANS," Mr. Goff said during a conference call with investors.

Tesoro consumed 40,000 bpd of crude oil from North Dakota and 5,000 bpd of Canadian light oil at its refinery in Anacortes, Wash., which displaced ANS and foreign crude oil, a Tesoro executive said during the call.

Tesoro plans to run its refineries at 90% of capacity on average in the first quarter, up from 89% in the fourth quarter. California fuel sales were improving from the low levels brought about by a slow economy, Mr. Goff said.

Maintenance work was scheduled to end at its refinery in Wilmington, Calif., during the first quarter, Mr. Goff said. Maintenance work at its Anacortes refinery would end early in the second quarter.

Dow Jones Newswires

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