Changing perceptions: CEO of company building $900 million Davis Refinery emphasizes environment

BISMARCK — Meridian Energy Group CEO Bill Prentice said his company wants to make southwest North Dakota home to an oil refinery that could change the industry, and he’s ready to win over the people trying to prevent them from doing that.

Meridian has proposed building the Davis Refinery in Billings County just west of Belfield and three miles from the outskirts of Theodore Roosevelt National Park’s South Unit.

The $900 million refinery would initially convert 27,500 barrels of Bakken crude oil into gasoline, diesel fuel and various refined products, and could expand to handle 55,000 barrels a day. However, Meridian’s plan expectedly has been met with pushback from park officials and environmental advocates across the state who believe the refinery would impact the park’s pristine air quality.

Prentice, speaking Tuesday at the Williston Basin Petroleum Conference, emphasized his company’s commitment to the environment and said in an interview that the industry eventually has to change mindsets of what it means for an oil refinery to move into an area.

“I think it’s going to define how the hydrocarbon processing industry looks at being a neighbor of everybody,” Prentice said of the Davis Refinery. “There’s no longer going to be this solution that you kick us out into some industrial ghetto. This industry has to know how to build a plant that can be right there (near the park), and that’s what we’re going to do.”

State Sen. Rich Wardner, R-Dickinson, sitting near the front of the crowd during Prentice’s 10-minute presentation, said he appreciated Meridian’s confidence that it can build a refinery without impacting the park’s air quality.

“I’m always concerned with the national park right there,” Wardner, the state’s Senate Majority Leader, told Prentice. “What I like about it is that doesn’t faze you guys one bit, but they’re out trying to cut you off.”

Prentice said he believes some of those opposed to the Davis Refinery “have only ever seen an old refinery,” and that Meridian is making investments into being more environmentally friendly than any other refining company in the U.S.

“We have the ability to start with a blank sheet of paper and that’s what we’ve done,” Prentice said. “Even the people at the park will be surprised to see what we end up with there. They’re visualizing something different. For myself, I kind of like the idea that we’re so close to the park that we have to meet the most stringent air quality requirements that there are in this country. That doesn’t bother us.”

Prentice said Meridian plans to file its air-quality permits by July. In the meantime, equipment for the refinery will start being fabricated in Houston. If the permits are approved by the North Dakota Department of Health and the refinery clears all of its other governmental hurdles, Prentice said construction could start as early as February 2017 with mechanical construction complete by early next summer and the refinery operating by the end of 2017.

“That’s really moving out for a project of this size,” he said. “But the guys that I’ve got working on it have done it before and in less time.”

 

Meeting the requirements

Prentice said he has spent his career building refineries, so he understands why people may be upset that Meridian is attempting to build a refinery three miles from the border of Theodore Roosevelt National Park. Outside of work, the 63-year-old is an outdoorsman who said he enjoys mountain climbing.

“In my career, I’ve had difficulty reconciling some of the things that I’ve worked on with my natural inclination,” he said. “It’s difficult to try and act dispassionate and professional about it when you don’t think your personal point of view is really being taken into consideration. That’s why this is not the kind of refinery that you’d go down and drive along the ship channel in Houston and see. We’re going to meet all the requirements.”

Jim Arthaud, the CEO of Belfield-based MBI Energy Services, is also a Billings County commissioner and is part of the body in charge of approving the refinery’s zoning permitting. Because Arthaud said his company doesn’t have a conflict of interest with the refinery, he has tackled the project as a public servant.

He said he is trying to make sure Meridian Energy Group “checks all the boxes” to assure it’s properly permitted.

“This is, theoretically, the biggest project that western North Dakota has ever seen. A billion dollars, they’re talking,” said Arthaud, who spoke at the conference during a difference breakout session. “With that being said, if we’re going to consider it, we have to know all the facts.”

Prentice said he believes Arthaud has been tougher on the refinery permitting process because he’s in the energy industry.

“He’s adamant that nobody is ever going to be able to criticize the permitting process,” Prentice said.

 

Additional plans

The five-year plan for the Davis Refinery, Prentice said, is to have pipelines built heading south and east to aid with exporting its products via the railroad.

“Pipelines are the safest, and cleanest way to do this by far,” Prentice said. “The problem is, on the product side, all of your products don’t always want to go to the same place all the time. Rail is what takes up the slack whenever that happens.”

He added that it’s “inevitable” that Meridian will create more than just a refinery in southwest North Dakota. He said the company has discussed unmet local demand for ag chemicals and even brandied about the idea of a malting plant.

Prentice said other plans could include ideas incubated at the Davis Refinery by its own employees.

“I’m putting our prediction hat on, but I could see five or six different spin-off opportunities just fostered by the fact that we’re going to be there in business and people are going to see those opportunities,” he said.

Mike Fladeland, manager of energy business development with the state Department of Commerce, said he’s interested in the trickle-down benefits the Davis Refinery could have if it’s built.

He said the state is increasingly interested in value-added products and businesses created as a result of the Bakken Oil Patch.

“The key thing with that refinery, is it fits in with what we want to do with commerce,” Fladeland said.

Prentice said current oil prices, which on Tuesday closed below $50 a barrel, haven’t affected Meridian’s long-term outlook.

“If you check the price of oil, you’ll never build a plant,” Prentice said. “I don’t know the price of oil today. You can’t do that. I don’t care about the downturn. If I’m alive enough, I’ll probably go through four cycles during this refinery. The comparison of crude oil to refined products, that spread, our operating efficiencies will ensure that we’re always operating under that spread. We’re always going to make money.”

Author: Dustin Monke

Former newspaper editor. Now I market the best baked goods and donuts in America. But every once in a while, I write a cool story too.

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