By Melanie Franner
The North Dakota refinery industry is about to advance by leaps and bounds, so says William Prentice, CEO of the Meridian Energy Group, Inc. The company’s proposed Davis crude oil refinery is expected to be a state-of-the-art facility located in the heart of the Bakken oilfields – which currently produces around 1.2 million barrels of oil every day – and ships some 95 per cent of that to refineries located hundreds of miles away.
The Davis Refinery received permitting approval from Billings County in early July.
“This new refinery signals a very significant change in the way the downstream industry will be organized in the future,” explains Prentice. “We are not tied to legacy technology, such as when you modify an existing facility, but instead have the opportunity to make use of the many advances in hydro-carbon processing technology that have emerged over the past several years. That is why this refinery will be orders of magnitude cleaner than existing facilities.”
The new technology – something that Prentice refers to as more like a new process strategy than a new process design – will not only increase efficiencies, reduce costs, and lower emissions, it will also change the way refineries are viewed from here on in.
“The average age of oil refineries in the U.S. is between 40 and 50 years,” explains Prentice, who adds that the Davis refinery will be the only second greenfield facility constructed in the U.S. for the past few decades. “None of the things that we’re going to use have ever been put together like this. Some of the pieces have been used here and there in retrofits, but there won’t be anything else like this in the U.S. The combination of all these elements will change the way the industry has been managed. It used to be that you kicked refineries into some industrial ghetto. The way our facility will operate will mean that you can locate it anywhere – like right beside some of the best oil producers in the country. We’re taking a downstream industry and moving it upstream. That will equate into all sorts of economic efficiencies as well.”
The new Davis refinery is currently undergoing the necessary permitting and regulatory processes. Prentice anticipates that these will all be in place by the end of 2016, whereby Meridian Energy Group can begin field construction on the 715 acres of land near Belfield.
“During the interim period, we will be buying/fabricating long lead-time items to compress the schedule and prepare all of this equipment and material to be moved to North Dakota when we get into the ground,” explains Prentice, adding that the expectation is to be in operation on the first stage of the refinery by the end of 2017. “The initial capacity, placed into service in about 18 months, will be 27,500 bpd, producing gasoline, kerosene, diesel, and ATB. This capacity will be doubled in the next phase, with additional complexity, and the bottoms will be turned into liquid fuels.”
Some 500 jobs are expected to be generated during the initial construction phase, with about 200 full-time jobs during actual operations.
“The State of Washington has done studies of the local economic impact of refineries in Anacortes, which indicates that the employment multiplier – ratio of total increased employment to direct employment – is about 12:1,” explains Prentice. “This means that the Davis refinery will result in total increased employment in the region of up to 2,400 jobs.”
Full speed ahead
Although Prentice admits that the Davis refinery project has received some “mixed” reactions, he is quick to add that these reactions tend to stem from people’s idea of an old-school refinery.
“Both Billings County and the North Dakota Department of Health are giving us a chance to show them what the Davis refinery is going to be like, which is miles different from what is currently out there,” says Prentice. “We are filing the air quality control permit as a minor source, which is very significant for a refinery of this size.”
Already, North Dakota State Governor Jack Dalrymple is on board.
“We wish them the best in their efforts to move beyond the initial stages of development,” he says. “North Dakota is a great place to pursue new endeavors, and we continue to support the development of projects that add value to our many resources.”
And, as far as Prentice is concerned, the governor’s response is one that he is getting from all levels of government.
“With very few exceptions, the reaction to the project has been very positive once our approach has been made clear,” he concludes. “Government officials at both the state and county levels have been very thorough and tough on us, but the evaluation and approval process has been very fair. North Dakota is no stranger to energy development, and we have found that there is an exceptional level of competency at all regulatory levels, which makes our jobs easier in the long run.”by