Tesoro Corporation 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, Washington. The initial investment, estimated to be around USD 400M, 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 fibres 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 CEO.
The project is expected to generate competitive returns similar to other strategic capital projects delivered by Tesoro in recent years. The new facilities are expected to start up in 2017.