By the OGJ Online Staff
HOUSTON, July 17 -- Tesoro Petroleum Corp. is buying BP PLC's Salt Lake City, Utah, and Mandan, ND, refineries and associated assets for $677 million, excluding working capital.
The deal includes two refineries, associated North Dakota crude and product pipelines, bulk storage, eight product distribution terminals, and 45 retail gasoline stations. BP will also assign to Tesoro contracts for about 300 Amoco-branded stations that are owned by about 80 Amoco-branded gasoline jobbers.
The acquisition would give Tesoro five refineries with a combined throughput capacity of 390,000 b/d. In addition, Tesoro's branded retail stations will expand to 640 locations while adding 700 employees to Tesoro.
The companies said they would seek required regulatory approvals and close the acquisition early in the fourth quarter.
BP's 55,000-b/d Salt Lake City refinery is the largest of four refineries in Utah. More than half of its production is gasoline, with principal other products of diesel and jet fuel.
The 60,000-b/d Mandan refinery, near Bismarck, produces mostly gasoline, with the balance in distillates, jet fuel and other products.
Bruce Smith, Tesoro's chairman, president and CEO, said, "We believe that these additions improve our ability to rapidly supply markets in areas that we have previously targeted for retail and commercial marketing expansion."
Robert Malone, BP's regional president for the western US, said, "Today's milestone agreement ensures the markets supplied by the Salt Lake City and Mandan refineries will have their ongoing demand for gasoline and other petroleum products supply met."
Malone noted that the divestment was consistent with BP's global refining strategy, announced in 1999, of retaining only those refineries which provided advantaged supplies for its marketing operations -- particularly in the provision of clean fuels -- or were integrated with other parts of the business such as chemicals.
The sale will leave BP with worldwide refining capacity of 2.8 million b/d, of which about 1.5 million b/d will be in the US. It plans to sell its 58,600 b/d Yorktown, Va., refinery and its share in the Singapore Refining Co.
The Salt Lake City refinery employs 90 people and has five processing units. The Mandan refinery employs 210 people. Its bulk storage and pipeline operations will be included in the sale.
Distribution terminals included in the agreement are in Salt Lake City; Boise and Burley, Idaho; Mandan and Jamestown, ND; and Moorhead, Sauk Centre, and the Twin Cities area in Minnesota.
The agreement includes company-owned gasoline stations in Utah and North Dakota and assignment of supply agreements for Amoco-branded gasoline stations in Idaho, North Dakota, Utah, Washington, Wyoming, Nevada, Oregon, Montana, and northwest Colorado.