Tesoro Plans for Network Growth

SAN ANTONIO -- Last week's agreement for Tesoro Corp. to supply fuel to approximately 300 Shell-branded stations across five Western U.S. states not only doubled the company's network in those markets, but it also opened the door for the refiner and wholesaler to grow the brand in a market that is well positioned for growth, company officials told CSNews Online.

"It allows us to offer an existing premium brand in states well connected to our refineries in North Dakota and Utah," Lynn D. Westfall, senior vice president of external affairs for Tesoro, told CSNews Online.

The deal includes the existing Shell-branded wholesale supply contracts in North Dakota, South Dakota, Minnesota, Utah and most of Idaho. The 300 stations included in the agreement add to Tesoro's existing network of more than 250 Tesoro-branded locations in those five areas -- approximately 89 jobber/dealer sites in North Dakota; approximately 63 sites in Utah, of which 31 are company operated and 32 are jobber/dealers; approximately 70 jobber/dealer sites in Minnesota; and approximately 34 sites in Idaho, seven of which are company operated and the rest are jobber/dealers.

As CSNews Online reported when the deal was announced Aug. 30, under the terms, Tesoro may grow the Shell brand in these areas.

"The midcontinent of the U.S. has experienced less effect from the current recession and are well positioned for growth," Westfall said. "By being able to supply these sites from our two existing refineries, we believe that we can provide the product necessary to supply growth in the present sites as well as add sites in the future."

Strategies for growth are under development, and will continue after the agreement becomes effective Jan. 1, 2011, he said, noting the company does not currently anticipate major changes in operations or investments to the sites.

As a result of the deal, the Tesoro retail system will boast approximately 650 Shell-branded stations. Tesoro's retail-marketing system includes more than 875 branded retail stations, of which more than 380 are company-operated under the Tesoro, Shell, Mirastar and USA Gasoline brands.