With eye on discounted Bakken crude, Par Pacific buys refinery

By Luke Geiver | November 28, 2018

A Houston-based energy infrastructure company will pay nearly $340 million for a Washington refinery advantaged because of its connection to Bakken crude. Par Pacific has agreed to acquire U.S. Oil & Refining Co.’s Tacoma, Washington-energy complex that includes a 42,000-bpd refinery and 107-rail car facility capable of handling nearly 60,000 bopd of Bakken and other crude sources from the Rockies or Canada.

Par Pacific has been in talks with the private equity-backed U.S. Oil & Refining since the spring and now has a deal set that will help it connect crude from the Bakken and Western Canada to energy operations in the Pacific Northwest and Hawaii. Much of the crude is used to make gasoline, distillate or asphalt. Barges and pipelines in Tacoma will move product that stays in the continental U.S. to West Coast locations.

Because the Tacoma facility can source crude from multiple sources, Par Pacific President Bill Pate said the company can take advantage of discounted crudes like Bakken (compared to West Texas Intermediate) or other Canadian blends. Currently 95 percent of all crude used at the refinery comes from the Bakken or Cold Lake with the majority coming from the Bakken.

“This transformative acquisition connects our existing assets in Hawaii, Pacific Northwest and the Rockies to create an integrated downstream network with significantly enhanced scale and diversification,” said Pate. “We have been executing an ambitious strategic growth plan focused on attractive downstream markets for over three years and the acquisition of U.S. Oil further demonstrates the progress we have made.”

 Bakken crude is currently trading at a disoucnt to WTI. The shale play is also producing more oil per day than it currently has capacity to use in the region or to transport out of the region.