San Antonio-based refiner Tesoro Corp. is planning to invest $400 million in petrochemical feedstock manufacturing in its U.S. West Coast refining system.

The company intends to upgrade its facility at Anacortes, Washington, so that it can start extracting xylene from intermediate feedstock produced at its other West Coast plans. Tesoro operates a total of six refineries in the western United States with a combined capacity of over 850,000 barrels. According to a statement by the company, the upgrade will allow it to recover 15,000 barrels per day of the chemical.

The bulk of the xylene output will be exported to Asia, where it will be used to produce a range of products, including polyester fibers and films for clothing, food packaging and beverage containers. Tesoro explained that demand for xylene is growing worldwide, primarily driven by manufacturers in Asia. Global demand for the chemical is rising at about five percent to 7 percent every year, the company estimated.

The final investment decision will be made by the end of this year. If Tesoro goes ahead with its plan, the new facilities are expected to be in operation in 2017.

Greg Goff, president and chief executive officer of Tesoro, said that product diversification would provide the company with better opportunities to meet its goals for focusing on high return capital projects and increasing its gross margin.