Image courtesy of United Steelworkers.

Tesoro Corporation began the restarting process at its Martinez, California refinery on Monday after reaching a deal with striking union workers at three of its refineries.

“We are pleased to have reached an agreement with the local union at our Martinez, California refinery and are commencing the restart process today,” Tesoro chairman and CEO Greg Goff said.

Goff said the facility should be back to normal operating levels during the next two weeks.

The refinery employs 650 full time workers and has a crude oil capacity of 166,000 barrels per day.

The Martinez refinery was in the final stages of major turnaround maintenance when the United Steelworkers (USW) issued a strike notice on February 1.

The union reached a tentative four year deal with Shell, the oil industry’s representative during contract talks, earlier this month to help end work stoppages at 16 U.S. refineries and plants.

“The safest option at that time was to safely idle the remaining operating units and transition to operating the facility as a terminal,” San Antonio-based Tesoro said.

Tesoro has also reached agreements with the local USW groups at its Carson, California and Anacortes, Washington refineries that have allowed employees at those refineries to return to work.

The company said local unions at the Mandan, North Dakota and Salt Lake City, Utah refineries are expected to vote on contracts during the next few days.

The strike bumped operating costs up higher than Tesoro’s previous guidance and pushed capture rates down compared to historical averages across its West Coast system.

The company is currently estimating its California operating costs will be between $7.70 and $7.95 per barrel.

“The Martinez, California strike and Anacortes, Washington and Salt Lake City turnarounds will negatively impact system capture rates by approximately $1.50 to $2.00 per barrel during the first quarter, and we expect to realize a positive impact to capture rates in the second quarter as we complete the planned turnarounds,” Tesoro said.

The idling of operations at Martinez also raised crude inventory along with the higher planned inventory ahead of the Anacortes and Salt Lake City refinery turnarounds.

The inventory builds are expected to result in a use of working capital during the first quarter of 2015.

The company said it will reverse the working capital impacts in the second quarter as it restarts and comes out of turnarounds at its refineries.


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