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Published January 21, 2011, 04:30 PM

Tesoro Refinery in ND Cuts Production After Fire

Production at Tesoro Corp.'s refinery in North Dakota has been reduced about 10 percent due to a fire that damaged a gasoline-making unit at the factory, the company said Friday.

By: Associated Press,

BISMARCK, N.D. (AP) — Production at Tesoro Corp.'s refinery in North Dakota has been reduced about 10 percent due to a fire that damaged a gasoline-making unit at the factory, the company said Friday.

Tesoro spokesman Leif Peterson said the refinery continues to provide an adequate amount of fuel products to its customers after Wednesday's fire.

"We're still meeting our contractual obligations," spokesman Leif Peterson said Friday.

The blaze occurred Wednesday afternoon at a furnace that processes an ingredient for high-octane gasoline, the company said. The fire consumed about 250 barrels of gas oil that's normally blended with gasoline to bump octane, said Mike Marcy, a company spokesman.

"The good news is if you're going to have a fire you want to have a fire in a furnace, but it was too much for the furnace to handle," Marcy said.

There were no injuries at the refinery, which has about 240 workers, the company said. The fire was extinguished by Tesoro firefighters in about two hours.

A team of investigators from the San Antonio-based refiner were still investigating the cause of the blaze on Friday. Marcy said it was unclear the extent of the damage or when the refinery would resume running at full capacity.

The Mandan refinery was built in 1954 and is the only refinery in the state. It converts nearly 60,000 barrels of North Dakota sweet crude daily into gasoline, diesel, jet fuel, propane, butane and residual fuel.

The company would not say whether it has reduced any crude shipments from North Dakota's oil patch.

Ron Ness, president of the North Dakota Petroleum Council, said he didn't know if any shipments had been curbed or if price discounts for crude from North Dakota's oil patch jumped after the refinery fire.

Prices for North Dakota crude generally lag about 10 percent behind other oil on the New York Mercantile Exchange because of the lack of shipping infrastructure and increased distances of getting it to market.

Most of the Mandan refinery's products are shipped through pipelines to eastern North Dakota and Minnesota and sold to customers in the Dakotas, Minnesota and Wisconsin, Peterson said. Gasoline makes up about 60 percent of the refinery's production on average.

About 80 percent of the diesel and 35 percent of the gasoline produced at the refinery stays in North Dakota, he said.

Gasoline was the fuel most affected by the fire, but it would still be produced at levels to satiate customer contracts, the company said.

Mike Rud, president of the North Dakota Petroleum Marketers Association, said there didn't appear to be any fuel disruptions from Tesoro on Friday.

"I have not got any complaints from anyone not being able to access the fuel they need," Rud said. He did not know whether the refinery fire would result in higher gasoline prices at the pump.

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