BISMARCK, N.D. (AP) — Texas-based Tesoro Corp. has bought an oil refinery in southwestern North Dakota that has struggled to turn a profit.
North Dakota-based MDU Resources Group Inc. and Indianapolis-based Calumet Specialty Products Partners LP spent $430 million on the Dakota Prairie Refinery in Dickinson. It began selling fuel last year but hasn't been profitable due to the slumping oil industry and low diesel prices.
The plant lost $7.2 million in the first three months of the year, and officials in May announced plans to operate it at only 75 percent capacity. The developers also had considered a similar plant in Minot but late last year delayed those plans because of the red ink at the Dickinson plant, which currently totals about $66 million.
MDU Resources subsidiary WBI Energy Inc. on Monday bought out a subsidiary of Calumet and sold the refinery to a subsidiary of Tesoro for an undisclosed price, the companies announced Tuesday.
"As a publicly traded corporation and a longtime North Dakota company, we felt a responsibility to our shareholders and to the state to find a solution that addressed the refinery's financial challenges, while ensuring it would continue operating and contributing to its neighboring communities and the state," MDU Resources CEO David Goodin said.
Calumet CEO Tim Go also said the sale is "an optimal outcome for all parties involved."
Tesoro, which also owns a refinery in Mandan, North Dakota, about 100 miles to the east, said the purchase of the Dickinson refinery gives it "strategic access" to crude from the Bakken oil patch and presents an opportunity for growth in the state.
Tesoro will assume the $66 million in debt and contribute about $10 million toward working capital, the company said.
"We expect to generate more than $20 million in annual operating income from this business — even if the current economic conditions continue," said Greg Goff, Tesoro's chairman, president and CEO.
The refinery can process up to 20,000 barrels of western North Dakota oil each day into diesel fuel and other products. A barrel is 42 gallons. The plant employs about 75 people.
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