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.”

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In lean times for oil industry, salespeople bear down

Joe Zayden, the Bakken region operations manager for Flow Data, had a booth Thursday, April 15, 2016, at the Bakken Oil Product & Service Show at the West River Ice Center in Dickinson. He said his company is weathering the slowdown by “basically just trying to maintain what we have.” Dustin Monke / Forum News Service
Joe Zayden, the Bakken region operations manager for Flow Data, had a booth Thursday, April 15, 2016, at the Bakken Oil Product & Service Show at the West River Ice Center in Dickinson. He said his company is weathering the slowdown by “basically just trying to maintain what we have.” Dustin Monke / Forum News Service

Charnel Zetsch came to Dickinson State University on a softball scholarship seven years ago.

She arrived in the early days of the oil boom and eventually found herself working in the energy industry.

Today, she’s a district sales manager for Magid Glove & Safety and is among several industry salespeople who are asking questions like this: “Why are you paying for a $10 glove when you could be buying a $2 glove?”

After all, with oil prices hovering around $40 a barrel at best, these truly are lean times in the North Dakota energy industry.

That point was drilled home at the Bakken Oil Product & Service Show this week in Dickinson. The trade show drew far fewer exhibitors than it did last year and, aside from some peak traffic moments, was considerably slower — just like the western North Dakota oil and gas industry.

Zetsch, who didn’t have an exhibit at the show, spent much of Thursday walking the West River Ice Center interacting with other oilfield industry salespeople to get a sense of how their businesses are doing.

“It’s tough right now,” she said. “We’re all kind of feeling this pressure. I think what most people are doing right now is really just ramping up and going back and looking at standard operational procedures. Whether it be inventory or the service side of things, they’re really trying to figure out where they were shorthanded and where they were super heavy-handed and try to balance the two.”

Tim Liston, who works in business development for Industrial Measurement and Control, said his company is looking at alternative ways to increase business. He said he made some good leads at the show and his booth drew attention because his company showed off its customized lease automatic custody transfer unit — a device that accurately measures oil.

As expected, Liston said business on the oil and gas production side has dropped off considerably. However, he said midstream companies — those who work with pipelines, refining or trucking — “are still spending money.”

“We’re looking for companies who still have project money available and they’re still going ahead with projects,” Liston said. “… That’s where I’m spending my time.”

The same was true for Winters Instruments sales representative Peter Chronis, who stood behind a table stocked with pressure gauges of all sizes and tried to make some connections.

The company, which has nine offices around the world, sells pressure instruments on every end of the oil production process. But, because the production is slower than a year ago, Chronis said he’s taking the opportunity to “lock in” to current customers who are still spending money, just not as much as they did during the boom years.

“It’s a double-edged sword, depending on which side of the market share pendulum you’re covering,” he said.

Joe Zayden spent two days at the trade show and called it “the slowest one I’ve been to in a couple years now.”

Zayden is the Bakken region operations manager for Flow Data, a Colorado-based company that manufactures and engineers products for wellhead automation. Though oil production in North Dakota hasn’t dropped off much in spite of the drilling drawback, Zayden said his company is weathering the slowdown by “basically just trying to maintain what we have.”

Zayden said his company is positioned well enough to pick up business from smaller wellhead service companies that are folding in the wake of the drop in oil prices.

And like most of the oil industry workers at the show, he remained confident that business will eventually pick up.

“We ain’t going anywhere,” Zayden said. “We’re not shutting down. We’re staying here.”

Monke: Obama's silly oil tax just another ego trip

When you ask three members of Congress the same question about a proposed policy and every one of them laughs about it, you know it can’t be good.

That was the case when I interviewed members of the North Dakota Congressional delegation about President Barack Obama’s proposed $10.25 per barrel oil production tax in his 2016 spending budget.

Republican Rep. Kevin Cramer called the tax “dead on arrival.” Sen. John Hoeven, also a Republican, believes it would go so far as to threaten national security. Sen. Heidi Heitkamp, a Democrat, said trying to impose this kind of tax on the oil industry right now was like kicking someone when they’re down.

All three of them agree it would mean thousands of lost jobs across the country.

And for what? More “environmental progress” as the president himself put it last week?

Look, I’m all for green energy and agree that we need an all-of-the-above energy strategy in this country. We know wind farms can work and earlier this year, I visited Yuma, Ariz., a city where solar panels are a common sight to see on rooftops.

Green energy is good energy. But there’s only so much we can do with it right now as a country.

Cars don’t run on hopes and dreams, and plastic isn’t created by fairy dust. Oil does that. Not wind. Not sunshine. Oil.

Obama said during a Feb. 5 press conference that Americans need to wean ourselves off “dirty fuels.” And that by doing this, and implementing this tax, it’s going to make for a stronger economy. “A wise decision for us to make,” he said.

I’m not sure our president understands — or for that matter, cares — about how much the oil industry matters to the American economy. Heck, I didn’t understand it until the industry planted itself in western North Dakota.

At that Feb. 5 press conference, Obama touted more fake job numbers handed to him by some lackey at a government agency being paid to create them for him out of thin air. But, you never heard one peep about the job boom created earlier in his presidency by shale oil production in North Dakota and Texas. Because he wanted nothing to do with it.

Now, with the oil industry on the downslide, Obama is doing what all good environmentalists do — he’s going for a killing blow and he’s trying to do it through government policy. Even though he’s highly likely to swing and miss on this one.

This pipe dream of a tax isn’t aimed at building roads and creating self-driving cars, as the president claims. It’s an ego trip wrapped around his radical agenda that the majority of Americans don’t even agree with.

Let’s hope Congress has some sense and tells Obama to kick this can down the road and straight into his recycling bin.

The boom’s gone, and some people in southwest North Dakota are OK with that

To get a sense of what’s happening in a community, it’s often best to consult the local barber.

Paul Ellerkamp owns Big Sky Barbers, a two-chair shop he runs with his younger brother in a north Dickinson strip mall.

Their business is a small, but accurate representation of the highs of the oil boom, the slows of the bust and the ongoing market stabilization the area is going through today.

The surprising similarity between the oil boom and now, Ellerkamp said, is his bottom line.

“We’re not turning away 50 people a day,” he said with a small sigh of relief. “… But somehow the bottom line is about the same. We do not see as many oilfield guys as we used to. I won’t even begin to give you a percentage of how much that has dropped off — but quite a few.”

As Dickinson and its surrounding small towns settle back into something similar to the pre-boom world, Ellerkamp said there’s plenty of positives to take from it.

“Overall, if you’d look at it from a person that has been here 10 years, or has lived here all their life, they kind of liked not so much of the hustle and bustle,” he said. “It’s definitely more of the hometown feeling.”

And so it goes for life in Dickinson and southwest North Dakota, where an oil boom brought thousands of people to the area, only to leave many high and dry when prices collapsed in early 2014 and kept falling through early January.

Now, instead of eyeing expansion and trying to track uncharted growth, most businesses and cities are planning for modesty and hoping they can plan for the possibility of both a calm and busy future, should oil prices and activity suddenly rebound.

Major projects and commercial development in Dickinson have all but come to a halt as the hub city begins paying off deficits created by infrastructure and building projects that helped alleviate the booming, oil-driven economy.

What remains of Dickinson’s once hurried building sector is on the public side, where the Dickinson Middle School building is taking shape and water treatment facilities are under construction. New commercial developments — such as stores and restaurants — while still opening, aren’t coming at as fast of a clip as they were the past two years.
However, Dickinson’s economy isn’t faltering — even in the face of low oil prices and uncertain farm commodities and livestock prices.

“We know we’re rebalancing the Dickinson economy now,” Stark Development Executive Vice President Gaylon Baker said in his State of the City speech on Jan. 19. “We’re going to get back to a more normal situation.”

Even the small towns in southwest North Dakota aren’t sweating the slowdown much.

“Some projects have kind of slowed down. Traffic has,” said Chuck Muscha, Killdeer’s mayor. “But I think probably the main people who had the biggest effect is the business owners. When this transpired, things were booming. Now they’re closer to normal.”

Mark Benz, who owns the Grab n’ Go convenience store at the corner of state Highways 22 and 200 as well as petroleum distributor Benz Oil in Killdeer, said the slowdown in activity is noticeable on both the visual and business side.

But, he said he’s maintaining a philosophy of “no rash decisions.”

While the convenience store opened in 2012 at the height of the boom, Benz Oil has been around since 1970. So Benz said he’s seen plenty of highs and lows in the oil business.

“One thing I know from being in this industry this long is it can change awful fast,” he said.

Even in Bowman County, where oil has been a part of life for decades, they’re subtly feeling the effects of the slowdown and playing the waiting game.

Like Dickinson, Bowman County doesn’t have big plans for 2016, County Commissioner Rick Braaten said.

“As far as our road and bridge budget, that’s our biggest one, all we’re doing there for this coming year is maintenance,” he said. “We’re not doing any projects or construction in 2016. We had a feeling funds were going to be quite a bit lower. We decided not to do any improvements on our roads this year.”

Teran Doerr, the executive director of the Bowman County Development Corp., said she has seen people lose jobs, businesses report slower sales and more housing come on the market.

“It almost feels like it happened overnight,” she said.

A carbon dioxide pipeline planned by Denbury Resources to use for injection on older wells in the county is still coming but the project is moving much slower, according to Denbury representatives.

New England, like Bowman, had been planning for 2015 to be the year it began seeing increased activity from the oil business.

Two oil rigs were drilling into the Tyler formation west of the city in Slope County in 2014. If they hit, the town of about 700 people was bound to boom. But the wells didn’t produce and when the prices dropped, Marathon Oil cut its losses and moved on.

Surprisingly, we are still doing well,” New England City Auditor Jason Jung said.

The city wrapped up the first of a likely four-year street and water project in 2015, Jung said.

The best decision the city made during the boom was not to overdo things, he said, adding that while new housing has sprung up and most new people who came to the area stayed, some are losing their oil jobs.

“The oil, we had some positive effects from it and we haven’t seen the negative effects,” Jung said. “We might be one of the few towns that might be that way instead of the opposite way.”

To the north in South Heart — Dickinson’s unofficial suburb — it was merely three years ago that South Heart Mayor Floyd Hurt stood with a shovel in hand and political dignitaries at his side to break ground on the new Dakota Prairie Refinery between his 300-person town and Dickinson.

Now, the refinery is operating but recently reported a $20 million loss traced back to low oil prices and lack of diesel fuel use in area, a crew camp in South Heart has closed and a planned massive facility for oilfield service giant Schlumberger is smaller than it was planned to be and very quiet.

Hurt said South Heart is still fairly happy with where it’s at, however.

The best thing to do is just sit tight and wait and see,” Hurt said. “If it starts going up and things start generating again, then make plans to move with the times.”

During his State of the City speech, Baker called it “highly unlikely” that the area’s energy industry would ever again “relive the speed, volume and chaos” of the past oil boom.

And, if folks around the area are to be believed, they’re just fine with that.

Insight: Interview with Lynn Helms

Following the State of the City address on Tuesday, Press Managing Editor Dustin Monke had an 11-minute chat with state Department of Mineral Resources Director Lynn Helms about the state of the southwest North Dakota energy industry.

They chatted about falling oil prices and rig numbers, the oilfield job outlook in western North Dakota and what kind of chances there are for oil production to ramp up in the Bakken.

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Check out this week’s full episode of Insight on the jump.

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