Tesoro spends $700M for Bakken gathering lines, gas plants

By The Bakken Magazine Staff | December 20, 2016

Tesoro Corp.’s presence in the Bakken continues to grow. Only months after acquiring a Bakken crude-supplied refinery in western North Dakota, the company’s logistics arm has spent $700 million on 650 miles of gathering pipeline and two natural gas processing facilities. 

Greg Goff, chairman and CEO of Tesoro Logistics LP, said the recently acquired assets have a chance for significant expansion and should be durable during the current oil price environment. The pipeline and gathering facilities are located in two major oil fields within the Williston Basin: the Pronghorn and Sanish fields. Acreage dedications from 10 different oil producers already exist within the area where the pipelines exist. 

Whiting Petroleum sold its 50 percent stake in both the Belfield natural gas processing facility along with its 50 percent stake in the Robinson Lake plant to Tesoro. Jim Volker, chairman, president and CEO, said the $375 million gained from the sale will be used to help fund development in the Williston and DJ Basins. “This sale aligns with our ongoing strategy to divest non-core midstream assets and focus capital in the company’s highly productive upstream business,” he said. 

WBI Energy Services—a subsidiary of MDU Resources—also sold its stake in the gathering lines and the processing facilities. Earlier in the year, MDU Resources sold its stake in the Dakota Prairie Refinery to Tesoro. In May 2012, WBI bought its stake in the Pronghorn facility for $66 million but through its sale to Tesoro it will earn roughly $100 million. 

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Year-by-Year Bakken Investments: 
2014: Tesoro Logistics acquires midstream business and ownership interest in QEP Field Services Co. in transaction valued at $2.5 billion.

2015: Through deal with crude oil logistics-provider Great Northern Midstream, Tesoro purchases pipelines, gathering systems, transportation, storage and rail loading assets in the Williston Basin. 

2016: Tersoro Corp. purchases ownership and control of 20,000-barrel-per-day Dakota Prairie refinery in western North Dakota.

2016: For $700 million, Tesoro Logistics acquires gathering pipeline infrastructure and two natural gas processing facilities in heart of Bakken oilfields. 


Projections for the newest assets: In 2017 and 2018, the processing facilities will treat between 125 mmcf/d to 140 mmcf/d. In 2017, 15 mbpd of crude oil will be moved and, in 2018, 25 mbpd is the projection.