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July 22, 2014

Tesoro announces plans for U.S. xylene production

Mary Page Bailey

Tesoro Corp. (San Antonio, Tex.; www.tsocorp.com) has announced plans to produce petrochemical feedstock in its U.S. West Coast refining system.  The company intends to gather intermediate feedstock, primarily reformate, from its West Coast refining system for xylene extraction at Anacortes, Wash.  The initial investment, estimated to be around $400 million, is designed to recover up to 15,000 barrels per day of mixed xylene.  The mixed xylene will mainly be exported to Asia and is used to make polyester fibers and films for clothing, food packaging and beverage containers.
 
The global xylene market is growing about 5% to 7% annually, primarily driven by demand in Asia.  Tesoro is well positioned as a supplier based on existing logistics and operating cost advantages.  "This attractive diversification of Tesoro's product mix supports our goals of enhancing our gross margin and investing in high return capital projects", said Greg Goff, Tesoro's president and chief executive officer. 
 
The project is expected to generate competitive returns similar to other strategic capital projects delivered by Tesoro in recent years.  Startup of the new facilities is expected to be in 2017, subject to permitting and the approval process.  A final investment decision is expected by year-end 2014.

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