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Tesoro Unit Reopens Crude Pipeline

BP TSO TLLP

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Tesoro Logistics LP (TLLP - Snapshot Report), an affiliate of independent refiner Tesoro Corp. (TSO - Analyst Report) recently brought online the North Dakota crude oil pipeline that was shut down on Sep 29 due to an oil spillage incident.  

The 35-mile underground pipeline, running from Tioga to Black Slough in North Dakota, reportedly ruptured and spilled over 20,000 barrels of oil on a farmland near Tioga. Initial investigation by the federal body indicates that a lightning strike was the cause. However, Tesoro Logistics has sent the damaged portion of the pipeline for further analysis.

The 20-year old pipeline was up and working post announcement by the San Antonio-based company that it has adopted the safety measures stated by the federal Pipeline and Hazardous Materials Safety Administration (PHMSA).

Before restarting the pipeline, Tesoro Logistics itself took several measures to ensure the safety and integrity of the line. These included a hydrotest on the replaced portion, tightness test holding pressure on the 35-mile pipeline, inspection of six different locations on the pipeline and installation of additional monitoring systems to detect leaks.

Tesoro Logistics is expected to bear a cost of about $4 million in cleaning up the spill which is estimated as one of the largest in the state’s history. Of the 20,600 barrels spilled, the company has dealt with about 4,500 barrels till now. Regulators believe that the incident has not caused any harm to ground water or wildlife. The pipeline was built by the British energy giant, BP plc (BP - Analyst Report) in 1993.

Tesoro Logistics is involved in the acquisition and development of logistics properties of crude oil and refined products and currently holds a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider other stocks like Pioneer Southwest Energy Partners L.P. as good investment opportunities. The stock currently holds a Zacks Rank #1 (Strong Buy).
 

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