UPDATE 2-Tesoro replacing older crude railcars in its fleet -CEO

Thu Feb 6, 2014 5:55pm EST
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* Entire fleet to have newest safety designs by mid-2014

* Railport project on target for late 2014, early 2015

By Kristen Hays

HOUSTON, Feb 6 (Reuters) - Independent refiner Tesoro Corp is replacing older railcars in its crude-by-rail fleet with ones that have the latest safety designs, Chief Executive Officer Greg Goff told analysts on Thursday.

He said 90 percent of Tesoro's fleet consists of railcars that meet the latest design standards embraced by the rail industry for all tank cars manufactured after October 2011. U.S. regulators have yet to impose such standards.

By mid-2014, Tesoro will have replaced the remaining 10 percent of its fleet, currently comprising older cars, with ones that meet the industry's newer design standards, Goff said during the company's quarterly earnings call.

Keith Casey, senior vice president of strategy and business development, told Reuters that as regulators consider imposing more stringent railcar standards, Tesoro decided to replace its remaining older cars "proactively, in advance of the regulations."

Refiners, railcar makers and railroads are in talks with regulators on stronger standards in the aftermath of several fiery crashes as oil-by-train transport has surged in tandem with the U.S. crude production boom.

It was the latest effort by a refiner to reassure the public about tank car safety following the crashes that sharply hiked scrutiny of moving oil by train.   Continued...