New Bakken Refinery Begins Operations

Refinery Construction | Copyright ©2010 MDU Resources Group, Inc.

The first U.S. refinery built in over 30 years began operations this week.

The Dakota Prairie refinery is located on 375 acres in Stark County, four miles west of Dickinson, N.D. and is in a prime location to access critical infrastructure such as rail, highway, natural gas, electricity, water and sewer.

Construction on the facility began in 2013 as a joint project of MDU Resources Group Inc. and Calumet Specialty Products Partners LP, with a price tag of $400 million.

The refinery will process 20,000 barrels of crude oil per day of locally sourced Bakken crude oil. Diesel sales are expected to begin this month with almost all of the fuel staying within a 50-mile radius of Dickinson.

“We need to invest in our nation’s energy infrastructure,” Sen. John Hoeven, R-N.D., said in a statement. “The Dakota Prairie Diesel Refinery is a good example of the kind of infrastructure investments that will help ensure a bright energy future for North Dakota and our nation. We are pleased to see production underway at the refinery. This facility is creating jobs and helping to grow our domestic energy production, which in turn will help to make our nation more energy secure.”

Read more at marketwatch.com

Delaware City Refinery Taking More Bakken Crude

PBF Energy's Delaware City Refinery is taking more and more Bakken crude. The company announced earlier in the month the refinery's rail facilities have the ability to unload as much as 100,000 b/d, 30,000 b/d more than expected in February.

“Better lucky than smart,” PBF Chairman Thomas D. O`Malley said. “We were lucky when we bought the Delaware City Refinery. They came with a large quantity of cornfields, soybean fields - in essence a surplus of about four-and-a-half thousand acres of land, and most of it was level. So we were able to put this (rail terminal) in.”

The company is also adding capacity to take more heavy oil from Canada. Once complete, the facility will have the capacity to unload 100,000 b/d of Bakken crude and 80,000 b/d of Canadian crude oil.

The Delaware City Refinery is just one of several on the East and West Coasts that are bringing in Bakken crude by rail in favor of waterborne crude from other parts of the world.

As of May 23, Bakken crude was trading below $90/bbl, WTI was trading at ~$93/bbl, and Brent (international) crude was trading above $101/bbl.

Enbridge Plans Philadelphia Rail Facility for Bakken Crude

Crude Oil Rail Car

Enbridge Rail has entered an agreement to partner in a unit-train facility and pipelines near Philadelphia. The partnership will be called the Eddystone Rail Company. Planned facilities will be used to bring Bakken crude to Pennsylvania refineries. The project is expected to handle 80,000 b/d by the third quarter 2013 and can be expanded to 160,000 b/d if needed. Current plans call for building track to accommodate 120 rail cars. The facility will include a 200,000 bbl storage tank and barge loading capability.

Enbridge will own 75% of the venture and Canopy Prospecting will own the remaining 25% interest. The companies are expected to spend $68 million constructing the facility. Enbridge will oversee the construction and day to day operation of the facility.

The latest announcement simply further expands Enbridge's footprint in the Bakken Shale.

"In early 2013, Enbridge's Bakken Expansion Program will add 200,000 bpd of increased export pipeline capacity from the Bakken - 80,000 bpd into Berthold and 120,000 bpd into Cromer, Manitoba - taking Enbridge's total capacity from North Dakota to 475,000 bpd.

"Rail is the fastest way to provide increased export capacity out of the Bakken, creating a near-term solution to transportation bottlenecks and the resulting crude oil pricing differentials," said Stephen J. Wuori, President, Liquids Pipelines, Enbridge Inc. "Eddystone is an important step in our longer-term strategy to accommodate the anticipated growth of light crude oil supply and to provide Bakken producers and PADD I refiners cost-effective capacity to premium markets on the eastern side of North America."

Bakken Refinery on Fort Berthold Reservation Gets Interior's Approval

Fort Berthold Indian Reservation Map

A proposed Bakken refinery on the Fort Berthold Indian Reservation has been approved by the department of interior. The refinery will be the first built on U.S. soil in over 30 years. Several major refinery expansions have been undertaken by Marathon, Exxon, and others in the past decade, but difficult permitting has made new build refineries a scarce sight. The 13,000 barrel per day Bakken refinery will be small in comparison to the super refineries that process more than 500,000 b/d, but it will be a significant economic development for North Dakota.

Secretary Salazar commented - [blockquote type="blockquote_quotes" align="left"]By working with the Mandan, Hidatsa and Arikara people to place this land into trust status, we are supporting infrastructure that will help bring American oil and gas to market while promoting Tribal economic development and self-determination regarding land and resource use.[/blockquote]"By working with the Mandan, Hidatsa and Arikara people to place this land into trust status, we are supporting infrastructure that will help bring American oil and gas to market while promoting Tribal economic development and self-determination regarding land and resource use."

The MHA National Clean Fuels Refinery will be another Bakken job engine in North Dakota. As many as 1,000 jobs will be created during construction and 140 permanent operational jobs will continue once the Bakken refinery is brought online.

The Bakken refinery is being designed with capacity of 13,000 b/d and will refine local crude into diesel, propane, and naptha products. The proposed site will be contributed to a trust by the MHA Nation for development. The three tribes asked the Interior`s Bureau of Indian Affairs to accept a 469-acre piece of property into trust. The proposed refinery will use ~190 acres and the remaining acreage will be used for the production of feed for the Tribes` buffalo herd.

Additional federal permitting will be handled by the U.S. Army Corps of Engineers, EPA and OSHA. The Bureau of Indian Affairs and the EPA led the drafting of the Environmental Impact Statement that was issued in 2009.

The EPA issued a National Pollution Discharge Elimination System permit for the refinery in August 2011, a step under the Clean Water Act that details required conditions and limitations for the proposed refinery`s operations. A thirty-day notice of the Department`s decision to acquire the land in trust is being published in the Federal Register.