<PAGE>

                                                                   Exhibit 10.29

                         MANAGEMENT STABILITY AGREEMENT

      This Management Stability Agreement is dated November 6, 2002, between
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"), and Rodney
S. Cason ("Employee").

                                    Recitals:

      WHEREAS, the Board of Directors of the Company has determined that it is
in the best interest of the Company to reduce uncertainty to certain key
employees of the Company in the event of certain fundamental events involving
the control or existence of the Company;

      WHEREAS, the Board of Directors of the Company has determined that an
agreement protecting certain interests of key employees of the Company in the
event of certain fundamental events involving the control or existence of the
Company is in the best interest of the Company because it will assist the
Company in attracting and retaining key employees such as this Employee; and

      WHEREAS, the Employee is relying on this Agreement and the obligations of
the Company hereunder in continuing to work for the Company.

      NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

      1. Termination Following Change of Control.

      Should Employee at any time within two years of a change of control cease
to be an employee of the Company (or its successor), by reason of (i)
involuntary termination by the Company (or its successor) other than for "cause"
(following a change of control), "cause" shall be limited to the conviction of
or a plea of nolo contendere to the charge of a felony (which, through lapse of
time or otherwise, is not subject to appeal), a material breach of fiduciary
duty to the Company through the misappropriation of Company funds or property)
or (ii) voluntary termination by Employee for "good reason upon change of
control" (as defined below), the Company (or its successor) shall pay to
Employee within ten days of such termination the following severance payments
and benefits:

            (a) A lump-sum payment equal to two times the base salary of the
            Employee at the then current rate; and

            (b) A lump-sum payment equal to (i) two times the sum of the target
            bonuses under all of the Company's incentive bonus plans applicable
            to the Employee for the year in which the termination occurs or the
            year in which the change of control occurred, whichever is greater,
            and (ii) if termination occurs in the fourth quarter of a calendar
            year, the sum of the target bonuses under all of the Company's
            incentive bonus plans applicable to Employee for the year in which
            the termination occurs prorated daily based on the number of days


                                                                          Page 1
<PAGE>

            from the beginning of the calendar year in which the termination
            occurs to and including the date of termination.

The Company (or its successor) shall also provide continuing coverage and
benefits comparable to all life, health and disability plans of the Company for
a period of 24 months from the date of termination and shall receive two years
additional service credit under the current non-qualified supplemental pension
plans, or successors thereto, of the Company applicable to the Employee on the
date of termination.

                  For purposes of this Agreement, a "change of control" shall be
            deemed to have occurred if (i) there shall be consummated (A) any
            consolidation or merger of the Company in which the Company is not
            the continuing or surviving corporation or pursuant to which shares
            of the Company's Common Stock would be converted into cash,
            securities or other property, other than a merger of the Company
            where a majority of the Board of Directors of the surviving
            corporation are, and for a two year period after the merger continue
            to be, persons who were directors of the Company immediately prior
            to the merger or were elected as directors, or nominated for
            election as directors, by a vote of at least two-thirds of the
            directors then still in office who were directors of the Company
            immediately prior to the merger, or (B) any sale, lease, exchange or
            transfer (in one transaction or a series of related transactions) of
            all or substantially all of the assets of the Company, or (ii) the
            shareholders of the Company shall approve any plan or proposal for
            the liquidation or dissolution of the Company, or (iii) (A) any
            "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
            Securities Exchange Act of 1934, as amended (the "Exchange Act"),
            other than the Company or a subsidiary thereof or any employee
            benefit plan sponsored by the Company or a subsidiary thereof, shall
            become the beneficial owner (within the meaning of Rule 13d-3 under
            the Exchange Act) of securities of the Company representing 20
            percent or more of the combined voting power of the Company's then
            outstanding securities ordinarily (and apart from rights accruing in
            special circumstances) having the right to vote in the election of
            directors, as a result of a tender or exchange offer, open market
            purchases, privately negotiated purchases or otherwise, and (B) at
            any time during a period of one year thereafter, individuals who
            immediately prior to the beginning of such period constituted the
            Board of Directors of the Company shall cease for any reason to
            constitute at least a majority thereof, unless the election or the
            nomination by the Board of Directors for election by the Company's
            shareholders of each new director during such period was approved by
            a vote of at least two-thirds of the directors then still in office
            who were directors at the beginning of such period.


                                                                          Page 2
<PAGE>

            For purposes of this Section 1, "good reason upon change of control"
            shall exist if any of the following occurs:

            (i) without Employee's express written consent, the assignment to
            Employee of any duties inconsistent with the employment of Employee
            immediately prior to the change of control, or a significant
            diminution of Employee's positions, duties, responsibilities and
            status with the Company from those immediately prior to a change of
            control or a diminution in Employee's titles or offices as in effect
            immediately prior to a change of control, or any removal of Employee
            from, or any failure to reelect Employee to, any of such positions;

            (ii) a reduction by the Company in Employee's base salary in effect
            immediately prior to a change of control;

            (iii) the failure by the Company to continue in effect any thrift,
            stock ownership, pension, life insurance, health, dental and
            accident or disability plan in which Employee is participating or is
            eligible to participate at the time of the change of control (or
            plans providing Employee with substantially similar benefits),
            except as otherwise required by the terms of such plans as in effect
            at the time of any change of control or the taking of any action by
            the Company which would adversely affect Employee's participation in
            or materially reduce Employee's benefits under any of such plans or
            deprive Employee of any material fringe benefits enjoyed by Employee
            at the time of the change of control or the failure by the Company
            to provide the Employee with the number of paid vacation days to
            which Employee is entitled in accordance with the vacation policies
            of the Company in effect at the time of a change of control;

            (iv) the failure by the Company to continue in effect any incentive
            plan or arrangement (including without limitation, the Company's
            Incentive Compensation Plan and similar incentive compensation
            benefits) in which Employee is participating at the time of a change
            of control (or to substitute and continue other plans or
            arrangements providing the Employee with substantially similar
            benefits), except as otherwise required by the terms of such plans
            as in effect at the time of any change of control;

            (v) the failure by the Company to continue in effect any plan or
            arrangement with respect to securities of the Company (including,
            without limitation, any plan or arrangement to receive and exercise
            stock options, stock appreciation rights, restricted stock or grants
            thereof or to acquire stock or other securities of the Company) in
            which Employee is participating at the time of a change of control
            (or to substitute and continue plans or arrangements providing the


                                                                          Page 3
<PAGE>

            Employee with substantially similar benefits), except as otherwise
            required by the terms of such plans as in effect at the time of any
            change of control or the taking of any action by the Company which
            would adversely affect Employee's participation in or materially
            reduce Employee's benefits under any such plan;

            (vi) the relocation of the Company's offices where Employee is
            presently based to a location outside that office area, or the
            Company's requiring Employee to be based anywhere other than at the
            location of the Company's offices where Employee is presently based,
            except for required travel on the Company's business to an extent
            substantially consistent with Employee's present business travel
            obligations, or, in the event Employee consents to any such
            relocation of the Company's offices where Employee is presently
            based, the failure by the Company to pay (or reimburse Employee for)
            all reasonable moving expenses incurred by Employee relating to a
            change of Employee's principal residence in connection with such
            relocation and to indemnify Employee against any loss (defined as
            the difference between the actual sale price of such residence and
            the higher of (a) Employee's aggregate investment in such residence
            or (b) the fair market value thereof as determined by a real estate
            appraiser reasonably satisfactory to both Employee and the Company
            at the time the Employee's principal residence is offered for sale
            in connection with any such change of residence;

            (vii) any failure by the Company to obtain the assumption of this
            Agreement by any successor or assign of the Company;

      In the event of a change of control as "change of control" is defined in
any stock option plan or stock option agreement pursuant to which the Employee
holds options to purchase common stock of the Company, Employee shall retain the
rights to all accelerated vesting and other benefits under the terms thereof.

      The Company shall pay any attorney fees incurred by Employee in reasonably
seeking to enforce the terms of this Paragraph 1.

      2. Complete Agreement.

      This Agreement constitutes the entire agreement between the parties and
cancels and supersedes all other agreements between the parties which may have
related to the subject matter contained in this Agreement.

      3. Modification; Amendment; Waiver.

      No modification, amendment or waiver of any provisions of this Agreement
shall be effective unless approved in writing by both parties. The failure at
any time to enforce any of the provisions



                                                                          Page 4
<PAGE>

of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of either party thereafter to enforce each and
every provision hereof in accordance with its terms.

      4. Governing Law; Jurisdiction.

      This Agreement and performance under it, and all proceedings that may
ensue from its breach, shall be construed in accordance with and under the laws
of the State of Texas.

      5. Severability.

      Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

      6. Assignment.

      The rights and obligations of the parties under this Agreement shall be
binding upon and inure to the benefit of their respective successors, assigns,
executors, administrators and heirs, provided, however, that the Company may not
assign any duties under this Agreement without the prior written consent of the
Employee.

      7. Limitation.

      This Agreement shall not confer any right or impose any obligation on the
Company to continue the employment of Employee in any capacity, or limit the
right of the Company or Employee to terminate Employee's employment.

      8. Notices.

      All notices and other communications under this Agreement shall be in
writing and shall be given in person or by telegraph, facsimile or first class
mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given when delivered personally or three days after mailing or
one day after transmission of a telegram or facsimile, as the case may be, to
the representative persons named below:

      If to the Company:                      Corporate Secretary
                                              Tesoro Petroleum Corporation
                                              300 Concord Plaza Drive
                                              San Antonio, Texas 78216-6999

      If to the Employee:                     Rodney S. Cason
                                              50663 Dossow Street
                                              Kenai, Alaska 99611



                                                                          Page 5
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

                   COMPANY:        TESORO PETROLEUM CORPORATION

                                   By /s/ BRUCE A. SMITH
                                   ---------------------------------------------
                                   Bruce A. Smith
                                   Chairman of the Board of Directors, President
                                   and Chief Executive Officer


                   EMPLOYEE:       /s/ RODNEY S. CASON
                                   ---------------------------------------------
                                   Rodney S. Cason


                                                                          Page 6