Tesoro pulls plug on Kenai store

Posted: Friday, December 22, 2000

A Tesoro gas station next to McDonald's in Kenai is the latest casualty of Tesoro's effort to make the company more profitable.

"The fuel market in Kenai is very limited, and there were more stations than the market could reasonably support," said Rik Bucy, who oversees Tesoro's 30 company-owned Alaska service stations and convenience stores.

Tesoro also supplies fuel to more than 150 independently owned service stations.

Thursday morning, workers loaded the roof and sign that sheltered the pumps at the former station on the Kenai Spur Highway onto a flatbed trailer truck. Employees of the former Tesoro 2GO Mart convenience store moved the remaining stock to the Tesoro store at the corner of Willow Street and the Spur Highway.

The employees of the former station have taken jobs at other Tesoro sites, Bucy said, and Tesoro will try to sublease the space for the eight years remaining on the lease.

According to Bucy, the Kenai store is the fifth Tesoro site closed by the company in its effort to upgrade its service and offer customers "the best fueling facilities we can and the best convenience stores we can."

The store that closed in Kenai did not sell propane or diesel, he said. The Willow Street store sells both. Tesoro is using retail supplies from the closed store to expand the selection at the Willow Street store, he said. Tesoro also has installed pay-at-the-pump technology, new computers and new pumps at its remaining Kenai stores.

"We've made lots of improvements to those sites in the last couple of weeks," he said.

Tesoro, which owns refineries in Nikiski, Washington and Hawaii, has been looking at ways to increase the profitability of its Alaska operations following dismal fourth-quarter results last year.

"Alaska got off to a bad start in 1999," said Ron Noel, vice president and general counsel for Tesoro Alaska Co.

During the fourth quarter last year, the Nikiski refinery lost nearly $3.3 million, Noel said in February.

Last winter, Tesoro considered closing or selling the Nikiski refinery and importing fuel to supply its Alaska gas stations.

Instead, managers settled on measures to make the Alaska business more profitable. In addition to closing poorly performing service stations, Tesoro sold a heating oil business in Fairbanks, cut staff at its Anchorage headquarters and consolidated accounting for many of its retail outlets, Noel said.

He said the Nikiski refinery operated at a profit this year.

"At the refinery, there haven't been any personnel cuts. That is a very lean operation," he said.

On Wednesday, Tesoro announced that it expects strong fourth-quarter earnings.

"The current plan is to keep our operations in Alaska," he said. "There will be limited money for capital investment, but things look much better than they did last year."

Bucy said he has no immediate plans to close additional central Kenai Peninsula retail stations.

"It depends on the economy," he said. "We're always evaluating our stations for profitability. If they're not profitable, we do what we can to make them profitable. If we don't succeed, we close them."

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