Dakota Prairie Refinery, Stark County, North Dakota, United States of America
Dakota Prairie Refinery, the second refinery in the state of North Dakota, broke ground in March 2013. The new refinery will process crude oil to produce diesel, as well as other hydrocarbons.
Dakota Prairie Refinery is located two miles west of Dickinson City in Stark County of south-western North Dakota. It will be the first Greenfield refinery project in the US since the 1970s.
The refinery will be built and operated by Dakota Prairie Refining, a joint venture between MDU Resources and Calumet Specialty Products. The construction of the $300m refinery is slated for completion in late 2014.
The project will create 400 to 500 jobs during construction and employ 100 people for its operation.
Dakota Prairie Refinery background
MDU Resources and Calumet Specialty Products signed a letter of interest to develop the Dakota Prairie Refinery project in 2012. The companies jointly invested $12m for the refinery's feasibility studies and engineering and design works during the year.
Dakota Prairie Refining, a joint venture between the two companies to develop, build and operate the refinery, was announced in February 2013.
Calumet provides $75m to the project and MDU contributes $150m through its subsidiary WBI Energy. The rest $75m is financed through a loan.
MDU will provide part of the crude oil, as well as the natural gas and electricity utilities for the refinery. Calumet will procure additional crude oil to run the operations and market the products of the refinery.
The profit from the refinery operation will be shared equally between the two companies.
Bakken crude oil production rates
Dakota Prairie Refinery is being built on an area of 318 acres just south to the Interstate 94. The site has good proximity to rail, water and electricity as well.
The refinery will require 120 to 150 gallons of water per minute for its operations, most of which will be supplied through a pipeline from the new wastewater treatment facility of Dickinson City.
The refinery will process 20,000 barrels of Bakken crude oil per day. The crude for the refinery will be supplied via a nearby pipeline, as well as tanker trucks.
The Dakota Prairie Refinery will operate as a topping plant. It will convert around one third of the crude oil into diesel fuel. The rest will be further processed in other Calumet refineries. The diesel output of the refinery will be marketed in Bakken region.
The refinery will produce approximately 7,000 barrels of diesel per day, which will reduce the amount of diesel imported into North Dakota.
Contractors involved with North Dakota's refinery
Bismarck-based Westcon is the general contractor for constructing the refinery. Texas-based Ventech Engineering is providing the primary equipment, as well as the refinery technology for the plant.
The project involves a number of subsidiaries of MDU Resources as subcontractors.
Knife River and MDU Construction Services Group will be involved in the construction of the refinery. WBI Energy will supply natural gas for the refinery, whiles Montana-Dakota Utilities will provide the electricity for the plant. Fidelity Exploration and Production, which is also a segment of MDU Resources, will partly supply crude oil to the refinery.
North Dakota's crude oil production
North Dakota's annual crude oil production has more than doubled between 2010 and 2012 with increased extraction of oil from the deposits of Bakken Formation in the north-west corner of North Dakota. The state accounted for ten percent of the total crude oil production in the US in 2012, which makes it the largest oil producing state in America, followed by Texas and the US Federal Offshore region.
The country produced 770,000 barrels of crude oil per day in December 2012. The use of horizontal drilling and hydraulic fracturing of deposits in the Bakken Formation in the Williston Basin led to the increase of crude oil production in the state.
North Dakota, however, has just one refinery currently, the Tesoro refinery in Mandan, which has a processing capacity of 58,000 barrels of crude oil per day. Much of the crude oil produced in North Dakota is sent to other markets through pipeline, rail and truck.
In contrast, the demand for diesel fuel and kerosene in the state has increased significantly. The diesel consumption rose by 51% between 2007 and 2012. North Dakota's current diesel demand per day is 53,000 barrels, with half of the state's diesel fuel imported.
The scenario has created investment opportunities in the refinery business in North Dakota.
A refinery near Trenton in the north-west North Dakota has also been planned apart from Dakota Prairie. The $200m Trenton refinery owned by Dakota Oil Processing is likely to break ground in 2013. The 20,000 barrel-per-day Trenton plant will mainly produce light gas oil.
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