Tosco Corp., Stamford, Conn., is expanding its refining operations on the U.S. West Coast.
The Stamford, Conn., company agreed to buy BP Oil Co.'s 85,000 b/d Ferndale, Wash., refinery in a trade that could be valued at $325 million.
Tosco also owns a 145,000 b/cd refinery at Martinez, Calif., where it has started up a project to produce low sulfur, low aromatics diesel fuel that meets California specifications. The project, which involved an outlay of more than $30 million, will produce about 25,000 b/d of the higher valued fuel (OGJ, Sept. 13, p. 33).
The new purchase agreement also covers BP's Pacific Northwest retail marketing assets in Washington and Oregon and product terminals at Renton and Tacoma, Wash. Retail assets, supplying more than 16% of the two state market, consist of 105 company owned stations, 27 leased stations, and a marketing network serving 377 independently owned, BP branded outlets. Tosco will continue to operate the retail network under the BP brand.
Tosco will pay $125 million for the assets and purchase normal inventories at closing. BP values the inventories at about $30 million. In addition, BP will participate in future retail and refining profits if market conditions improve during the next 5 years, up to a cumulative addition of $150 million.
Tosco expects to fund the purchase with an equal combination of equity and debt. Completion of the trade is subject to certain conditions.
Tosco will have the option to buy Alaskan North Slope crude oil from BP to supply the Ferndale refinery.
BP Oil Pres. Steve Percy said the trade will allow his company to concentrate its resources in its key Ohio and Southeast regions.
"We built a fine market position in Oregon and Washington but were unable to develop our West Coast position further," he said.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
