Tesoro launches restart of Martinez refinery following strike

Tesoro Corp. has launched a restart of its 166,000-b/d Golden Eagle refinery near Martinez, Calif., after an agreement was reached with a local union, ending a 52-day strike.

"The facility should be back to normal operating levels over the next two weeks," said Greg Goff, Tesoro chairman and chief executive officer.

The refinery was in the final stages of major turnaround maintenance activity when the United Steelworkers union (USW) issued a strike notice on Feb. 1. Tesoro says the safest option at that time was to idle the remaining operating units and transition to operating the facility as a terminal.

Including Golden Eagle, the unfair labor practice (ULP) strike affected 15 refineries in the US. USW and Shell—the lead company for National Oil Bargaining (NOB) negotiations—reached a preliminary agreement on Mar. 13 (OGJ Online, Mar. 13, 2015).

In February 2014, a sulfuric acid release caused by loose pipe fittings seriously injured two workers at Golden Eagle (OGJ Online, Aug. 18, 2014). USW subsequently blasted Tesoro over a lack of safety (OGJ Online, Feb. 24, 2014).

Tesoro has also reached agreements with the local USW at its Carson, Calif., and Anacortes, Wash., refineries. Workers at those refineries are returning to work. The local unions at the Mandan, ND, and Salt Lake City, Utah, refineries, meanwhile, are expected to vote on their respective contracts over the next few days, the company says.

Higher operating costs

Tesoro says the strike resulted in higher operating costs and lower capture rates compared with historical averages across the company’s West Coast system. The company estimates the California operating costs at between $7.70-7.95/bbl.

The Martinez strike and Anacortes and Salt Lake City turnarounds will negatively impact system capture rates by $1.50-2/bbl during the first quarter. Tesoro expects to realize a positive impact to capture rates in the second quarter as it completes the planned turnarounds.

The idling of operations at Martinez resulted in higher crude inventory along with the higher planned inventory ahead of the Anacortes and Salt Lake City refinery turnarounds. These inventory builds are expected to result in a use of working capital during the first quarter.

Tesoro expects the working capital impacts will reverse in the second quarter, as it restarts and comes out of turnarounds at its refineries.

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