8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 10, 2006

Tesoro Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-3473	95-0862768
(State or other jurisdiction	(Commission File Number)	(IRS Employer Identification No.)
of incorporation)

300 Concord Plaza Drive
San Antonio, Texas
(Address of principal executive offices) 78216-6999
(Zip Code)

(210) 828-8484
(Registrant’s telephone number,
including area code)

Not Applicable
(Former name or former address, if
changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 8.01 Other Events.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
Index to Exhibits
Press Release

Item 8.01 Other Events.

On July 10, 2006, Tesoro Corporation (“Tesoro” or the “Company”) issued a press release (the “Press Release”) announcing it will not proceed with the coker project at the Washington refinery due to significant cost increases from original estimates. The coker project was originally estimated to cost $250 million. The total cost to terminate the coker project is expected to be approximately $31 million. The Company expects to recover a yet-to-be determined portion of the investment in the project and will record pre-tax special charges starting in the 2006 second quarter.

Tesoro also announced that the modification of the coker at the California refinery is now anticipated to cost approximately $415 million. Total capital spending is now expected to total approximately $630 million including turnarounds during 2006. Tesoro is presently revising the capital spending plan for 2007 and future years and is expecting to release a budget during the 2006 fourth quarter. The Press Release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

     (c) Exhibits.

          99.1 Press Release issued on July 10, 2006 by Tesoro Corporation.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 10, 2006

TESORO CORPORATION
By:	/s/ G. SCOTT SPENDLOVE
	G. Scott Spendlove
	Vice President and Controller

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Index to Exhibits

Exhibit Number	Description
99.1	Press Release issued on July 10, 2006 by Tesoro Corporation.

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EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

Contact:

Investors:
Scott Phipps, Manager, Investor Relations, (210) 283-2882

Media:
Sarah Simpson, Vice President, Corporate Communications, (210) 283-2374

Tesoro Corporation Provides Update on Capital Spending

     SAN ANTONIO — July 10, 2006 -Tesoro Corporation (NYSE:TSO) announced today it will no longer proceed with the coker project at its Anacortes, Washington refinery due to the significant cost increases from original estimates. The proposed 25,000 barrel a day coker, capable of processing heavier crude oil, was originally estimated to cost $250 million and to begin production in the fourth quarter of 2007.

     However, the Company said it will continue as planned with units designed to increase the refinery’s sulfur handling capabilities, increase utilization and maintain the Company’s excellence in environmental compliance. The project will cost an estimated $55 million and is expected to be on-line in the fourth quarter of 2007. With the ability to process a greater percentage of heavier sour crude oils, we estimate that the refinery will be able to capture up to 20% of the original heavy crude oil benefit of the delayed coker beginning in 2008. Original EBITDA contribution estimates for the Anacortes coker were $30 million in 2007 and $86 million in 2008.

     “The decision to cancel the Anacortes coker project is consistent with what we told investors about our capital strategy’s project assessment process and our commitment to high return projects,” said Bruce Smith, President, Chairman and CEO. “As we reviewed the cost of the entire project, it no longer met our rate of return

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Tesoro Corporation Provides Update on Capital Spending

objectives for economic projects because the cost of engineering, materials and labor had increased similar to escalations that have been announced on other projects both within and outside the energy sector. I was very pleased, however, to see our organization find another heavy crude solution that meets our investment criteria.”

     Total cost to terminate the Anacortes coker project is expected to be approximately $31 million. The Company expects to recover a yet-to-be determined portion of the investment in the project and will record pre-tax special charges starting in the second quarter.

     Golden Eagle Coker Project

     Tesoro confirmed today its commitment to the Golden Eagle coker modification project even though it also has experienced a cost increase. The modification of the coker at the Company’s Golden Eagle refinery in Martinez, California is now anticipated to cost approximately $415 million. This project enables the Company to comply with the terms of an abatement order signed with the California air quality regulators earlier this year. “We believe the project is a win-win since it achieves the best environmental solution by significantly reducing air emissions and adds to shareholder value by enhancing the refinery’s capabilities in terms of reliability, lengthening turnaround cycles and reducing costs,” said Smith. Some of those benefits include:

• extending the typical coker turnaround cycle from 2.5 years to 5 years,

• significantly reducing the duration of coker turnarounds

     The primary alternative to modifying the coker was the installation of a flue gas scrubber which would have cost approximately $250 million and would not have provided additional capabilities or cost reduction opportunities at the refinery.

     Capital Spending Update

     Total capital spending for 2006 is expected to be approximately $630 million including turnarounds. This reflects:

• a reduction of $61 million relating to the cancellation of the Anacortes coker

• a reduction of $36 million from delayed, cancelled or deferred projects

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Tesoro Corporation Provides Update on Capital Spending

• an additional $17 million of regulatory projects

• an additional $40 million for further projects

     Increases in the cost of the Golden Eagle coker will not impact 2006 capital expenditures.

     Tesoro is presently revising the capital spending plan for 2007 and future years and is expecting to release a budget during the fourth quarter. “I’m confident that we will continue to have a strong portfolio of high-return, organic growth projects as we move forward with our capital review program,” concluded Smith.

     Tesoro Earnings Release

     Tesoro Corporation will announce its 2^nd Quarter earnings on Thursday, August 3^rd at 3 pm CDT. You can listen online at tsocorp.com.

     Tesoro Corporation, a Fortune 200 Company, is an independent refiner and marketer of petroleum products. Tesoro operates six refineries in the western United States with a combined capacity of approximately 560,000 barrels per day. Tesoro’s retail-marketing system includes nearly 475 branded retail stations, of which over 200 are Company owned and operated under the Tesoroâ and Mirastarâ brands.

     This news release contains certain statements that are “forward-looking” statements concerning economic and operational benefits of certain capital projects within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For more information concerning factors that could affect these statements see our annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. We undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, after the date hereof.

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