Successful Integration of Southern California Operations
In 2013, Tesoro made significant progress in integrating the Los Angeles refinery and related assets into the Company’s Southern California operations.
For a number of years, Tesoro’s strategic planners had been aware that the Los Angeles refinery, then owned by BP, was a highly desirable asset. So when BP put the refinery on the market in February 2011, Tesoro had already conducted some due diligence on the facility, and could concentrate instead on potential synergies and ways to increase stakeholder value.
“We saw that if the operations of the Los Angeles refinery were combined with those of our Wilmington refinery, it would improve our ability to serve our customers in California,” said John Robertson, Tesoro’s Vice President of Natural Gas Power and Specialty Products.
The new Los Angeles refinery created by this integration is capable of processing more than 360,000 barrels a day of crude oil in the Los Angeles area, making Tesoro one of the largest oil refiners on the West Coast.
Beyond this, Tesoro saw many other opportunities, including:
- The addition of a cogeneration facility, three marine terminals, four land storage terminals, four product marketing terminals, and more than 100 miles of pipeline, including one connected to Los Angeles International Airport.
- Acquiring a well-known, established brand in ARCO®, thanks to marketing agreements in place with 800 dealer-operated ARCO® gas stations in California, Arizona and Nevada.
- Adding a new business in calcined petroleum coke.
Robertson, then Senior Director, Integration, led what he calls a “phenomenal” integration team. Demonstrating powerful collaboration among all employees, the team was able to begin operations even while integration was still underway.
Operations during the transition ran without incident, safely and reliably. HR staff guided more than 1,700 new employees through new hire document processing and benefits enrollment, with 99 percent of new employees being processed in less than five days. Operations teams successfully migrated more than 60 refining applications and approximately 40 external refining applications. The IT team successfully integrated all IT systems, and more than 325 applications were tested and made operational in the first days following change in control. At midnight on May 31, 2013, the Los Angeles refinery was “switched over” to Tesoro in a flawless electronic handoff.
Beyond the clear business benefits, the integration of these Southern California operations provides opportunities for multiple stakeholders:
- Customers benefit from our maintaining the low-cost ARCO® brand in California.
- Environmental benefits include the acquisition of a modern cat cracker that will enable Tesoro to reduce carbon dioxide emissions by 350,000 per year.
- The community gains from Tesoro’s reaffirmed commitment to California, where the Company is one of the state’s largest taxpayers and is preserving and expanding highly skilled jobs.
Meanwhile, as John pointed out, “The outstanding employees who came to Tesoro have brought us knowledge and experience we can integrate into other operations. This includes new insights into best practices in safety, environmental and other areas. Every day, new benefits continue to be uncovered.”
Find this story and learn more about Tesoro’s Guiding Principles in our 2013 Social Responsibility Report.