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North Dakota is getting a new oil refinery

Meridian Energy gets final permit for Davis Refinery at Belfield, Phase 1 will be 27,500 bbl., Phase 2 takes that to 49,500 bbl.
Davis Refinery Lance Medlin
Lance Medlin spoke to the Williston Basin Petroleum Conference in Bismarck, N.D., on May 22.

Bismarck, N.D., Belfield, N.D – A new oil refinery at Belfield, N.D. has cleared its last regulatory hurdle and construction is expected to start very soon.

On June 13, Meridian Energy Group, Inc., announced that the North Dakota Department of Health (NDDoH) air quality division has issued the permit to construct (PTC) for the Davis Refinery at Belfield. The issuance of the PTC by the NDDoH comes 18 months after the initial application was filed by Meridian and is based on a thorough review of the Davis Refinery application documents, and a full three-month review of comments received during a 45-day public comment period.

This marks the first time that a full-conversion refinery of this size and complexity has been reviewed and approved as a “synthetic minor source.” Meridian said in a release that securing this classification reflects its innovative design, and dedication to attain the lowest achievable emission rates ever seen in a full-conversion oil refinery. Now that the final PTC has been issued, Meridian will proceed with detailed design, engineering, procurement and construction of the Davis Refinery.

A Meridian spokesperson told Pipeline News on June 22 that “Meridian will look to break ground on the Davis Refinery in the next two weeks.”

“We fully appreciate the thorough and meticulous review performed by the NDDoH, which held us accountable at every phase of the review process,” said Meridian CEO William Prentice. “Meridian’s design efforts, which included modifications and improvements made as a result of their rigorous review, have ensured that the Davis Refinery will operate in full compliance with the law, and in a manner that is responsive to the concerns of the local community. The Davis Refinery will indeed be the cleanest refinery on the planet when completed.”

Prentice then added, “Publication of this final permit validates the enormous amount of work performed by the entire team and the Davis PTC also represents the culmination of the tireless efforts of the NDDoH staff. Meridian and its team utilized the current limits of technical innovation throughout this process, and never stopped seeking opportunities to make the Davis Refinery as clean as it could possibly be. We hope Davis becomes the new blueprint for all refinery projects that follow it.”

On May 22 at the Williston Basin Petroleum Conference in Bismarck, N.D., Lance Medlin, executive vice president, projects, with Meridian, gave a presentation on the project. After that presentation, he spoke at length with Pipeline News about their plans.

Phase 1 will be under half a billion dollars, and a similar amount is expected for Phase 2, according to Medlin. The initial phase will be a 27,500 barrels per day (bpd) hydro-skimming plant, with full commercial operation in early 2020. It will produce finished gasoline, kerosene/jet-A, ultra low sulfur diesel and low sulfur fuel oil (ATBs).

The planned expansion will bring that number up to 49,500 bpd.

The site is southwest of Belfield, immediately adjacent to the BNSF Railway Fryburg rail terminal.

He expects there will be about 1,000 workers in the construction phase. It will take 18 months from scratching dirt to completion. Asked how they will do it so quickly, he said, “Trade secrets,” but added that it will all be U.S.-sourced. “Anything not built in the U.S. will be by exception, by either licensed exception. I don’t have any intention, and it is my call, of shipping any work outside of the U.S.”

“We’ve got plenty of fabrication capability in the U.S., and it is tremendously underused right now. Even though we are coming out of our downturn, we are still in a downturn,” Medlin said.

“The majority of the facility will be modularly constructed. You’ve got to understand that a lot of the cost and schedule impacts affecting other facilities here were due to a stick-built design, and you’ve got the schedule impact of just the natural winter in this region. So modular fabrication, with onsite erection of modules, is the way to get it built within 18 months.”

He mentioned that there is a lot of fabrication capacity in Texas and Colorado, but also in Canada. “We’re talking about a lot of modules. A lot,” he emphasized. “So we’ve just taken the model and gone through it and modulized the design. It’s a lot of modules. It’s way too many for one yard. It’s way too much risk for one company to build all the modules. It has to be spread out.”

That will be up to the EPC firm for sourcing those modules.

With the air quality permit now in place, all the permitting is now in place. The land is all secured.

Asked in May how many people they had working for them, he responded, “How many people, or how many companies? We have six major contracts with major companies, burning manhours right now. We have a multimillion dollar contract burning manhours with our EPC (engineering, procurement and construction) contractor, who has already been selected and not announced. We are negotiating our EPC cost, as they are finalizing our feed.”

In May there were probably 200 people working on the project, principally engineers, project control, supply chain and procurement. In their early stages, they had 30 people on board, including contractors, in the U.S., but there were probably another 50 people in Venezuela working on drafting.

The company is raring to go. Asked how long it would take to get working once the permit was in place, Medlin enthusiastically said, “If it happens on a Saturday, it might take us until Monday. We’re ready. We’ve got yellow iron on standby. We have all of our contracts ready. We have LOIs (letters of intent) issued, MOUs (memorandum of understanding). If I can get the permit on a Friday, I can have surveyors and yellow iron on site 24 hours later. And I will.”

At this point, the company is backed by private equity.

Regarding the implantation of Phase 2, Medlin said, “There is no desire to wait between the completion of Phase 1 and the start of Phase 2. There’s no commercial desire. We want the revenue. And there’s no permitting reason to wait. We’re permitted for the entirety of the facility.”

They’re not looking at a refinery in Canada, but they are in the U.S. “We are going through the regulatory process for our next refinery,” he said, but he can’t say where.