Northern Tier Energy is an independent downstream energy company with refining, retail, and pipeline operations that serve the PADD II region of the United States.
Northern Tier Energy’s refining business primarily consists of an 81,500 barrels per calendar day (84,500 barrels per stream day) refinery located in St. Paul Park, Minnesota. The St. Paul Park Refinery has a Nelson complexity index of 11.5, which refers to the ability of a refinery to produce finished products based on its investment intensity and cost relative to other refineries. The refinery’s complexity allows it to process a variety of light, heavy, sweet and sour crudes into higher value refined products.
The St. Paul Park Refinery is one of only two refineries in Minnesota and one of four refineries in the Upper Great Plains area within the PADD II region. The PADD II region covers Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Ohio, Oklahoma, Tennessee and Wisconsin. The refinery’s strategic location allows it direct access, primarily via the Minnesota Pipeline, to what the Company believes are abundant supplies of advantageously priced crude oils. Many of these crude oils have historically priced at a discount to NYMEX WTI. Further, over the past twelve months, NYMEX WTI has traded at an additional discount relative to waterborne crude oils such as Brent, which has contributed to strong refining margins at the St. Paul Park refinery.
The Company expects to continue to benefit from access to these growing crude oil supplies. By 2030, according to the CAPP, total Canadian crude oil production is expected to grow to 6.2 million bpd from 2011 production of 3.0 million bpd. Crude oil production from the Bakken Shale in North Dakota has also increased significantly, helping to grow crude oil production in North Dakota from approximately 98,000 bpd in 2005 to approximately 769,000 bpd as of December 2012, and is expected to continue to grow due to improvements in unconventional resource production techniques.
The refinery’s location also allows it to distribute its refined products throughout the Midwestern United States. The refinery produces a broad slate of refined products including gasoline, diesel, jet fuel and asphalt, which are then marketed to resellers and consumers primarily in the PADD II region.
Northern Tier Energy also owns various storage and transportation assets, including a light products terminal, a heavy products terminal, storage tanks, rail loading/unloading facilities and a Mississippi river dock. The refining business also includes a 17% interest in the Minnesota Pipe Line Company, which owns and operates the Minnesota Pipeline, a 455,000 bpd crude oil pipeline system that transports crude oil (primarily from Western Canada and North Dakota) for approximately 300 miles from the Enbridge pipeline hub at Clearbrook, Minnesota to the refinery. The Minnesota Pipeline has historically transported the majority of the crude oil used and processed in the refinery.
As of December 31, 2012, the retail business operated 166 convenience stores under the SuperAmerica brand and also supported 70 franchised convenience stores, which are also operated under the SuperAmerica brand. These convenience stores are located primarily in Minnesota and Wisconsin and sell various grades of gasoline and diesel, tobacco products and immediately consumable items such as non-alcoholic beverages, beer, prepared food and a large variety of snacks and prepackaged items. The refinery supplies substantially all of the gasoline and diesel sold in the company-operated and franchised convenience stores.
Northern Tier Energy also owns and operates SuperMom’s Bakery, which prepares and distributes baked goods and other prepared food items for sale in the company-operated and franchised convenience stores and other third party locations.