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Tesoro Corporation has announced that it will cease refining operations at its Kapolei refinery in Hawaii by April of this year, and begin the process of converting the refinery to an import, storage and distribution terminal of oil products.

In a statement, Tesoro said: "Tesoro Hawaii is committed to maintaining its focus on safe and environmentally sound operations during the shutdown and conversion process.

"Tesoro Hawaii will maintain the existing distribution system to support marketing operations and fulfill its supply commitments while continuing to offer the terminal, distribution and retail assets for sale."

Upon conversion of the refinery to an import, storage and distribution terminal, Tesoro Hawaii said it believes third party utilization of the terminal and associated logistics will facilitate ongoing supplies of refined products in Hawaii.

Tesoro is the leading supplier of transportation fuels in Hawaii and plays a key role in the distribution of both marine and aviation fuels.

The Kapolei refinery can process up to 94,000 barrels per day of crude oil to make bunker fuel, jet fuel, asphalt, gasoline, diesel and fuel oil for electrical generation.

Tesoro Hawaii distributes refined products statewide. On Oahu - the third largest of the Hawaiian Islands - pipelines from the Kapolei refinery feed terminals at Honolulu Harbor, Honolulu International Airport and military installations. Pipelines also deliver products to Kalaeloa Barbers Point Harbor, where they are transferred to ships and barges that supply the Neighbor Islands. Gasoline and diesel are sold through a network of Tesoro-branded retail stations on Oahu, Maui and the Big Island, and through distributors.

Tesoro said it expects to report one-time charges in the fourth quarter 2012 related to the conversion of the refinery to a terminal, including charges for asset impairment and asset retirement obligations. The one-time charges are estimated to be $1.00 - $1.10 per share.

The company also expects to realize between $300 million and $350 million in cash by the end of 2013, driven by a reduction in working capital needs as a result of this conversion.