Tesoro Hawaii Sold to PAR Petroleum
Phillips 66 To Build Rail Facility in Washington
Tesoro to Sell Boise Terminal To Comply with FTC
Phillips 66 Pipeline Breaks in Montana

TESORO HAWAII SOLD TO PAR PETROLEUM

HONOLULU, HI. — After being on the market for over a year and shutting down their Hawaii refinery in April, Tesoro Hawaii LLC has been sold to Par Petroleum Corporation.

The deal, signed in June, includes all of refining, retail and distribution assets in Hawaii, including the 94,000 barrel per day Kapolei refinery and 31 retail outlets. The service stations included in the sale will continue to carry the Tesoro brand.

Tesoro said the sales price of the Hawaii assets was $75 million, plus the market value of net working capital, plus an earn-out arrangement payable over three years of up to $40 million based on consolidated gross margins, making the total value of sale approximately $400 million.

Par Petroleum will place its new assets in a subsidiary which will operate under the name of Hawaii Pacific Energy LLC. William Haywood will serve as president of the new company which will be headquartered in Houston, TX. Haywood is a 30 year veteran of the industry and was most recently served as senior vice president of refining for Tesoro Corp.

"We felt that there was somebody out there with the right business plan to make it work and thatÕs what we found," said Lance Tanaka of Tesoro Hawaii. "Personally, I think this is the best possible outcome [because] here we have online refining that will be preserved and we have found someone willing to invest in our employees and the state of Hawaii will have refining and energy security, as well as Tesoro now being able to focus on its Mainland assets."

Tanaka said that Tesoro is now "in restart mode" for the Kapolei refinery. Tesoro has ordered crude oil for the facility, is currently in maintenance turnaround, and plans to restart the refinery and start producing product in September.

"This is a great fit for Par Petroleum and we are pleased to make a long-term investment in Hawaii's economy," said Will Monteleone, chairman of the board and CEO of Par Petroleum, in an official statement. "We have found in Tesoro Hawaii a great company with outstanding assets and a superb management team and employee base. We aim to serve customers through operational excellence and enhance value for the communities we serve with a focus on safety, environmental stewardship and employee commitment."

The sale of the Hawaii assets to Par Petroleum is expected to close during the third quarter, pending government approval.

PHILLIPS 66 TO BUILD RAIL FACILITY IN WASHINGTON

FERNDALE, WA. — Phillips 66 plans to begin building a new crude oil receiving facility at its refinery here this summer with the project scheduled for completion in December 2014.

According to a filing with the Northwest Clean Air Agency, the new receiving area would be designed to unload trains of 100 or more railcars powered by three or four train engines. The facility, as designed, would allow for the arrival of a loaded crude oil unit train, switching and offloading of the crude within 24 hours, and the transfer of approximately 12,800 barrels per hour.

The oil is expected to come from North American oil fields including shale crude oil from the Bakken fields in North Dakota and the Eagle Ford in Texas as well as Canadian crude and West Texas Intermediate.

With the completion of the project, Phillips 66 "will have a more localized and efficient crude source to provide gasoline, diesel, and other refined products to the Northwest."

TESORO TO SELL BOISE TERMINAL TO COMPLY WITH FTC

BOISE, ID. — Tesoro Corp. and its subsidiary, Tesoro Logistics Operations LLC, has agreed to sell their light petroleum products terminal here to comply with FTC requirements.

In December, 2012, Tesoro and its subsidiary had signed a deal to buy Chevron's Northwest Products Pipeline system, including the terminals operating as part of the system, for $355 million, subject to government approval.

Upon reviewing the deal, however, the Federal Trade Commission announced on June 17 that the purchase of the pipeline and terminal system would give too much control of the Idaho market to Tesoro.

The FTC noted that Tesoro would own two of the three full service light petroleum terminals in Boise, "significantly reducing competition" in that area, potentially leading to increased terminal costs and higher fuel prices for local consumers.

To comply with the FTC's order, Tesoro agreed to sell the terminal it currently owns in Boise to an FTC-approved buyer within six months of when the Chevron purchase is completed. As part of the deal, Tesoro also agreed to keep its current Boise terminal "a viable, competitive, and ongoing business" while the Chevron acquisition is being completed.

It is expected that the FTC will make a final ruling on the acquisition in the third quarter.

PHILLIPS 66 PIPELINE BREAKS IN MONTANA

BILLINGS, MT. — Phillips 66 reported a break in their Seminoe pipeline outside of Lodge Grass, MT., spilling an estimated 25,000 gallons of gasoline.

According to Phillips 66, the spill was detected by the pipeline operations staff in Bartlesville, OK., who noticed a drop of pressure in the line on July 3 and shut down the line immediately. The company found the location of the leak, on Montana's Crow Indian Reservation, and excavated the eight inch line to repair it.

The spill was "was not expected to enter any surface water supplies, and no public health problems were anticipated." The restart on the line will be subject to approval from the Environmental Protection Agency, the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration, and other government agencies.

The Seminoe pipeline transports gasoline, diesel, and other refined products from the Phillips 66 refinery in Billings, MT., to Wyoming, Utah, and Colorado.

Originally published in the August 2013 issue of O&A Marketing News.
Copyright 2013 by KAL Publications Inc.