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Tesoro Closes Acquisition of Midstream Infrastructure in North Dakota

San Antonio-based Tesoro Corp. said Monday it has closed a previously announced acquisition of various midstream oil assets in the Williston Basin in North Dakota, adding Great Northern Midstream LLC's assets in the Bakken. The cost of the acquisition was not disclosed.

Great Northern gives Tesoro added crude oil logistics assets that the Texas-based refiner characterized as "high-quality," including a recently constructed pipeline, gathering system, transportation, storage and rail loading facilities.

Tesoro senior officials have said they wanted to expand their footprint in the Bakken through its midstream unit, Tesoro Logistics LP (TLLP), noting at the beginning of last year that all of its projects were fully committed to by customers (see Shale DailyFeb. 13, 2015). At the time, CEO Greg Goff said Tesoro would continue to look for third-party acquisitions.

Announced early last month, the Great Northern assets include:

·         A 97-mile BakkenLink crude oil pipeline;

·         A proprietary 28-mile gathering system in the core of the Bakken; and

·         A 154,000 b/d rail loading and 657,000 bbl storage facility in Fryburg, ND.

The oil pipeline connects with several third-party gathering systems and the gathering system is supported by acreage dedication, Goff said. The rail loading and storage infrastructure can permit shipments to the West, East and Gulf Coasts.

The added infrastructure will help Tesoro establish more direct access to additional crude oil supplies for its West Coast refineries, offering the potential to reduce supply costs as the company continues to beef up its supply position, a Tesoro spokesperson said.

In 2016, Tesoro plans to offer some of the assets to its master limited partnership, providing ratable pipeline volumes to TLLP.

"These strategically located [Great Northern] assets are expected to integrate well with our existing assets to create an enhanced system that will serve as a platform for growth for both Tesoro and TLLP," Goff said. "It also builds on our existing capabilities to provide full-service logistics options for crude oil producers in North Dakota."

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