Late last week, Sen. Byron Dorgan, D-N.D., rejuvenated the oil refinery conversation with a $457,000 federal Energy Department grant to study the feasibility of an oil refinery in North Dakota. The Associated Press reported Dorgan believes North Dakota needs expanded oil refinery capacity to curb fuel shortages and take advantage of the oil-rich Bakken shale formation.
The study is to review the idea of a 100,000 barrels-per-day refinery, including determining the best location for such a facility. The North Dakota Association of Rural Electric Cooperatives is coordinating the study that involves an advisory board and steering committee.
The steering committee includes industry representatives such as Williston’s Mel Falcon, president of Northwest Refining Inc., which already is working on a 100,000 barrels-per-day refining proposal for our region. The steering committee also includes Rep. Kenton Onstad, D-Parshall, who along with Rep. Shirley Meyer, D-Dickinson, have been supporters of another refinery in the state.
Meyer is on the study group advisory board, along with Rep. Pat Hatlestad, R-Williston, Williston Economic Development director Tom Rolfstad, John Skurupey of McKenzie Electric Cooperative and Gene Veeder of the McKenzie County Job Development Authority. Meyer, Onstad, industry officials and others continue to point to the difficulties associated with getting North Dakota oil to market as a primary reason behind constructing a refinery in the state. Meyer told us the ongoing distribution problems have resulted in price discounts as high as $13 a barrel for North Dakota crude, resulting in millions of lost dollars in revenues for everyone, including the state coffers.
“We use more than we refine and we produce more than we use,” the AP reported Dorgan saying at a press conference announcing the grant.
The AP reported Dorgan said a new energy refinery would ease fuel shortages like those seen two summers ago saw North Dakotans paying some of the highest gasoline and diesel prices in the country. The shortages were caused by as many as eight nationwide refinery outages and a record harvest for crops.
A caution from a national oil industry official, however, encourages the study group to look at more than just the economics of a proposed refinery. The AP stated Charlie Drevna, president of the National Petrochemical and Refiners Association in Washington, D.C., said economic and political hurdles are huge.
“A brand new refinery hasn’t been built in the U.S. since 1976,” Drevna told the AP.
A 100,000-barrel refinery takes at least a decade to build because of current and pending legislation “that inhibits if not prohibits” new refineries, Drevna said.
“The political feasibility needs to be in that study, too,” he told the AP. “Given today’s political climate, it’s tough to build a refinery.”
Falcon and Meyer believe this new study is going to reinforce the work that Falcon’s project has done so far regarding the feasibility of such a proposal. Falcon’s project is part of a major energy complex proposal that is the focal point of the Mon-Dak Energy Alliance.
The alliance involves energy officials and community leaders from North Dakota and Montana who are proposing a complex that includes two oil refineries, ethanol and biofuels plants, a coal-to-liquids facility and wind energy.
We look forward to the results of this new study. We believe it is indeed going to reinforce what is already known ” that an oil refinery is feasible in North Dakota.
Fortunately, Falcon and the rest of the Mon-Dak Energy Alliance have a huge leg up on this matter given the work they have already completed. The study ultimately should provide a serious boost that may be immediately used by the alliance to forward its complex proposal.
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