Tesoro- West Coast crude rail unloading to hit nearly 1 mln bpd


* West Coast offloading expected to reach 910,000 bpd by2015

* Rail-to-barge project part of growth

By Kristen Hays

HOUSTON, Dec 10 (Reuters) - Independent refiner Tesoro Corp sees rail unloading capacity all along the U.S. WestCoast for North Dakota Bakken crude oil growing to nearly 1million barrels per day through 2015, an executive said onTuesday.

The projected jump to 910,000 bpd from the industry'scurrent unloading capacity of 218,000 bpd - an increase of morethan 300 percent - includes Tesoro's $100 million joint-venturerailport project in Washington state, Keith Casey, senior vicepresident of strategy and business development for Tesoro, saidon a webcast of the company's annual meeting with analysts.

Other refiners and logistics companies are building orseeking to build smaller projects to bring in cheaper crude viarail as well.

"Loading capacity is keeping pace with production growth,"Casey said.

The growth will accommodate increasing efforts by West Coastrefiners to tap inland U.S. and Canadian heavy crudes via rail -cheaper alternatives to imports and Alaskan crude - as no majorpipelines move crude to that largely isolated market.

Tesoro's rail-to-barge project with Savage Services is thelargest of the offloading projects announced so far.

Tesoro Chief Executive Greg Goff told analysts that therailport is seeking a state permit that would allow handling ofup to 380,000 barrels per day of crude.

"That will be the permit," Goff said. "But the way thesystem is being built, rail shipments we estimate will be around300,000 barrels per day there."

Tesoro expects the permit to be awarded by the third quarternext year.

Casey said West Coast refiners now receive about 810,000 bpdin what he called "substitutable" waterborne imports and Alaskancrude, or shipments that can be replaced by cheaper crudesreceived via rail.

The region's expected rail unloading capacity growth to910,000 bpd will more than surpass that, he said.

Tesoro is committed to take up to 60,000 bpd of crude railedto the Port of Vancouver once the project starts up in late 2014and early 2015, and the joint venture can offer the rest toother west Coast refiners.

Several also are working on their own rail offloadingprojects, including BP Plc, Phillips 66 and AlonEnergy USA. Tesoro also rails up to 50,000 bpd of Bakkencrude to its 120,000 bpd refinery in Anacortes, Washington.


Goff noted that Tesoro doesn't have long-term contracts forimports, so the company can easily substitute cheaper U.S. crudeat its refineries.

"In no case do we have long-term contracts that limit ourflexibility to take crude" except for a seven-year deal withNewfield Exploration Co to supply the company's 57,500 bpdrefinery in Salt Lake City, Utah, Goff said.

"Otherwise, we have the flexibility to optimize on ashort-term basis," he said.

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