North Dakota’s only oil refinery ending monthlong, $125M maintenance shutdown

By James Macpherson, AP
Wednesday, May 19, 2010

ND refinery ending monthlong maintenance

BISMARCK, N.D. — A monthlong $125 million overhaul at Tesoro Corp.’s Mandan refinery will be completed on time and within budget, the company says.

North Dakota’s sole oil refinery was idled on April 16 for maintenance and upgrades. The work included additional pollution controls and bumping the capacity by about 2,000 barrels daily for ultra-low sulfur diesel fuel used in off-road construction and farm equipment.

Work is slated to be finished this week with startup early next, said Lynn Westfall, a Tesoro spokesman in at the company’s headquarters in San Antonio.

Westfall declined to give the exact time of the restart next week because “it’s competitively sensitive.”

The refinery, built in 1954, converts nearly 60,000 barrels of Williston Basin crude oil daily into gasoline, diesel, jet fuel, propane, butane and residual fuel.

Lynn Helms, director of the state Department of Mineral Resources, said price differentials for crude from the state’s oil patch jumped up to 20 percent during the refinery shutdown.

“It’s a temporary situation here,” Helms said Wednesday. “A big part of out takeaway capacity is gone but we don’t expect that situation to last.”

North Dakota sweet crude typically garners about 10 percent less than daily oil prices on the New York Mercantile Exchange because of the difficulty in getting it to market. North Dakota sweet crude was fetching about $54 a barrel on Wednesday, compared with about $68 a barrel on the New York Mercantile Exchange.

About 1,500 contractors, as well as the refinery’s 240 employees, worked on the overhaul, the most extensive at the factory since 2003, the company said.

Tesoro, which acquired the refinery from BP in 2001, said it cached fuel stocks and shipped during the overhaul.

Mike Rud, president of the North Dakota Petroleum Marketers Association, said diesel supplies tightened in the state due to the refinery shutdown. But a wet spring provided some cushion against diesel shortages because rain delayed crop planting in parts of the state for about two weeks, he said.

The refinery’s planned increase of off-road diesel for farm and oil equipment will would help curb any potential shortages, Rud said.

“Diesel remains king in North Dakota, in the energy patch and in agriculture,” Rud said. “We have to make sure we keep it flowing because it is one of the economic drivers of our economy.”

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