On the cusp of the new Dakota Refinery’s losses and potential sale, the Bakken’s long term vision and plans continue. The Meridian Energy Group is continuing their plans to construct a state of the art refinery near Belfield, ND.
“Meridian Energy Group is a development stage company that was formed to build and operate a refinery in western North Dakota,” William Prentice, chairman and CEO, Meridian Energy Group.
Currently the Meridian Group is doing the lion’s share of their work both in Houston and California, however, as the project date nears the offices will be moving to the Bakken.
“We are a North Dakota corporation,” Prentice said. “Our headquarters will be up here.”
Prentice said they began detailed engineering and permitting on the project last January and have been pushing the new Davis Refinery through the various state agencies. The refinery is scheduled to begin construction and operation sometime in 2017.
“Upon release of the air quality, probably in February this coming year, we will start construction and the first phase will be operation by the end of 2017,” Prentice said. “We have a site located just west of Belfield.”
To the casual observer this may appear to be a risky venture, but to the Meridian Energy Group, it is a perfect opportunity to satisfy a growing need in the country’s constant quest to become energy independent.
“It’s much easier to take an existing refinery and modify it or expand it that it is to start with a blank piece of ground and go from there,” Prentice said. “I think the Dakota Prairie refinery and one or two smaller plants in the Houston area are the only brand new grassroots refineries in the past 30 years. The Davis refinery we are building will be the fourth such new plant, but it is substantially bigger than the others ones that have been out there.”
According to Prentice, the Dais Refinery will take Bakken crude from the surrounding area and refine it, then ship the products by rail and pipeline to market.
“Some of the markets are here in the Dakotas, otherwise generally speaking those products go east and south,” Prentice said.
The Davis Refinery will be different than the Dakota Refinery, which opened last summer. Prentice said the Davis Refinery will refine a variety of finished products, like gasoline, jet fuel and other petrochemical starting points for other products.
“The Dakota Prairie refinery, which we know quite a bit about because we are the in industry, was built to take Bakken crude and distill out of it the diesel that was used in the local market,” Prentice respectfully said. “They were looking to serve the drilling industry primarily as I understand it. And since that has fallen off, the local market has been more difficult for them.”
Prentice continued explaining the specifics on how the Davis Refinery differs from Dakota Prairie, and how more opportunity will be presented to oil and gas production in western North Dakota and the nation.
“(Dakota Prairie) But it’s a topping facility, not a true refinery,” Prentice said. “Our refinery is much more complex plant. Much bigger. And we will produce all the products a refinery typically produces.”
The Meridian Group has committed to a total 1900 acreage of the sites with Burlington Northern Santa Fe rail line running directly through the site. Prentice believes this will facilitate the construction of a crude oil feedstock offloading and refined fuels uploading terminal.
The Davis Refinery will not need the total 1900 acres for operation and the extra acreage will act as geographical cushion for the area.
“Quite a bit of that acreage will be devoted to agriculture buffers, new tree lines and some programs we are discussing with the local university,” Prentice said. “Things like woody plant development ash tree, beetle resistance kind of species. It just makes it a more attractive site for the surrounding community.”
The initial phase of the Davis Refinery will be 27,500 barrels per day and doubling by the end of 2018 to 55,000 barrels per day, according to Prentice. The total investment will be just under a billion dollars over the next 4-5 years.
“The construction will peak out at about 500 people. Permanent employees will ramp up to just under 200 over a two year period,” Prentice said. “The state of Washington did a study on the total impact of a refinery, looking at the refineries in Anacortes (WA), and they determined every refinery job created total employment from 10-12 other jobs. So at 200 employees we will be producing a total of 2200 to 2400 new jobs.”
Prentice was quick to point out their primary objective will be to hire local rather than import workers in from other parts of the country..
“We are not bringing in a whole bunch of refinery people from the Gulf Coast,” Prentice said. “We are going to start here where the labor pool is exceptionally well qualified from an agricultural based economy. The work ethic is great and there is a familiarity with machines and tools. We are going to start our labor pool here in western North Dakota.”
Another unique aspect of the Davis Refinery is the technology. Prentice appeared proud of the “new type of refinery” and believes it is going to impact the industry “that’ll become standard for the next 10-to-20 years”.
“We are structuring this as a tolling services refinery, in that we entering into long term agreements with crude producers and product offtakers, where they actually pay us a fee to produce those refined products,” Prentice said. “There are a number of firms we are in discussion with but I can not publicize those at this time.”
Over the past ten years, with the advent of shale oil, the technology and innovation has created new markets giving the industry a rebirth of the domestic energy industry. Prentice sees the Davis Refinery as another means to energy independence and global capitalism. A choice the U.S. has not seen in quite some time.
“For years and years we have seen refineries cluster in on the coast feeding off oil tankers from everybody from Venezuela to Saudi Arabia, the Bakken has brought back the domestic industry. We are going to be upstream to where the oil is, not down on the coast trying to feed on foreign stuff.”
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