New Bakken Refinery Begins Operations

May 5, 2015 Elizabeth Alford

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.”

Abraxas Buys 210 Bakken Acres

May 4, 2015 Elizabeth Alford

In a show of optimism, Abraxas Petroleum announced that it has purchased additional land in the Bakken region and plans to increase drilling by later in 2015.

The San Antonio-based company recently bought an interest in 210 acres of property in the Bakken Shale in North Dakota and will be seeking regulatory approval from the NDIC to control the acreage. This will pave the way for the Abraxas to add another 15 Bakken and Three Forks wells to the company’s inventory. Abraxas’ activity in the Williston Basin includes the Jore 5H, Jore 6H, Jore 7H and Jore 8H wells in McKenzie County, where the company hopes to begin fracturing in late May.

“Bob Watson, President and CEO of Abraxas, commented“The acquisition of additional Bakken interests directly plays into our strategy of acquiring interests at a reasonable cost that will provide future development in our core areas. Each operated unit we are able to successfully acquire adds approximately two years of inventory for our Company owned drilling rig and substantial potential reserves. We will continue to search for similar opportunities that will allow us to further consolidate our interests in our core regions in the currently distressed environment.”

Abraxas released 2015 first quarter production numbers showing an average of approximately 6,590 boepd (4,475 barrels of oil per day, 8,871 mcf of natural gas per day, 637 barrels of NGLs per day). The company reports that gas processing constraints in the Bakken negatively impacted production volumes.

Crude prices increased to $67 a barrel today, reaching a 2015 high after prices plummetted in the fall.

U.S. Economic Growth Slows

April 30, 2015 Elizabeth Alford

Data is beginning to surface on the U.S. economic growth for the first quarter of 2015 and its not looking good.

Marketwatch reports that the gross domestic product expanded by only 0.2% annual pace, well below what was forecasted. Gains over the prior three quarters were 2.2%, 5% and 4.6% respectively.

Much of the blame is being placed on the downturn in the energy industry. The 50% plunge in crude prices in 2014 initiated a domino effect through the economy. U.S. energy producers have been forced to slashed investment and have cut at least 30,000 jobs since January, according to the Commerce Department and it is estimated that the reduction in energy-related spending may have shaved 0.6% percentage points off of U.S. growth.

Many had predicted that the low oil prices would actually spark economic growth as consumers found more disposable from lower gasoline prices.

“Scott Hoyt, director of consumer economics at Moody’s Analytics shared an optimistic with Marketwatch, saying that “Energy-related investment and jobs are falling rapidly. However, these cuts will soon begin to fade, and the benefit to consumers from the lower oil prices will grow,”

Who Controls Fracking Regulations?

April 29, 2015 Elizabeth Alford

North Dakota Challenges Federal Authority

North Dakota will join forces with Colorado and Wyoming to challenge regulations on fracking.

The Federal District Court of Wyoming cleared the way for additional challenges to the U.S. Bureau of Land Management’s (BLM) authority to impose regulations on fracking practices.

At the center of the dispute is who has the ultimate authority to regulate fracking practices. States are claiming that an additional layer of federal regulation is unnecessary. North Dakota asserts that the BLM overstepped its authority by trying to interfere with the state’s current and comprehensive rules and standards. They claim these additional rules aren’t necessary because the EPA has already granted authority to the states to monitor and protect underground water sources.

“Colorado Attorney General Cynthia Coffman responded to the ruling. “To be clear, this case is not about whether hydraulic fracturing should or should not be regulated,” she said. “It should be regulated, and Colorado is doing so. However, the debate over hydraulic fracturing is complicated enough without the federal government encroaching on states’ rights.”

Lower Oil Tax for North Dakota

April 28, 2015 Elizabeth Alford

North Dakota is one step closer to cutting the price-triggered exemption that will lower the extraction tax on oil.

On Friday, North Dakota lawmakers cleared the way to change a 30 year old tax structure that gave some tax breaks for the oil industry have been linked to a price "trigger." Debate in North Dakota’s House was fierce and ended in a 66-26 vote in favor of cutting the state’s oil tax rate from 11.5 percent to 10 percent.

Republicans believe that this will provide a more stable table policy that will boost the state’s economy, but Democrats have said that it will cost the state billions over the next 10 years. The legislature’s research group estimates that the new tax structure will add $120 million to the state’s coffers between 2015-2017.

Now that the bill has cleared both house and the senate, the bill is now on its way to the governor’s desk for final approval.

“Governor Dalrymple’s spokesman Jeff Zent said the governor had not studied the bill. “Generally speaking, a flat tax offers the advantage of greater economic certainty,” Zent said. “But the details of any plan are very important, and we haven’t seen a final proposal.”

To read the full bill, visit nd.gov.