Tesoro has announced new projects designed to enhance clean products production at their Anacortes refinery, which continues to operate despite a strike.
These projects include a $90 million naphtha isomerization project, which is designed to comply with upcoming reduced-sulfur gasoline regulations while simultaneously reducing gasoline production costs, and the previously announced $300 million mixed xylenes project, which upgrades and diversifies the value of the facility’s product slate.
"Tesoro is pleased to announce this strategic commitment to our Anacortes facility and to the local community. These high-return capital projects are expected to produce cleaner fuels at a lower cost, while diversifying Tesoro's product mix and enhancing our gross margin," said Greg Goff, Tesoro's Chairman, President and CEO.
The isomerization project is expected to generate competitive returns of approximately 25% and the mixed xylenes project is expected to generate competitive returns of approximately 20%, both based on Tesoro’s market outlook. Startup of the mixed xylene project is expected in 2017 and startup of the isomerization project is expected in 2018, both dates subject to permitting.
These projects are expected to improve our capability to efficiently deliver both local transportation fuels and global feedstocks, making Tesoro a stronger member of the communities the Company serves, and further demonstrating Tesoro’s commitment to the state of Washington. The Company expects multiple benefits to the state including increased tax revenue, positive local economic impact, and high-paying temporary and permanent jobs which, at peak construction workforce, is estimated at 500 workers, with an ongoing permanent staff increase of approximately 20.
According to the Washington Research Council, each permanent petroleum job adds $880,000 per year of state personal income through additional employment and commerce.
On a global scale, the logistics-enabled Asian trade possibilities associated with the mixed xylenes project are quite significant, based on increased naphtha sales to Asia, reduced freight costs on shipments of valuable products from Asia to the US, and expansion of Tesoro trading activities in Asia. This aspect of the project should increase the competitiveness of the Anacortes refinery and support additional ongoing growth in Tesoro’s Washington-based business.