Shane Thielges | Shale Plays Media
North Dakota will soon be home to two new refineries dedicated to processing crude oil extracted from the Bakken shale.
Quantum Energy Inc. of Tempe, AZ announced on March 21 they had signed a purchase and sale agreement for 80 acres of land from Northstar Transloading LLC for construction of a new hydroskimming refinery. The land borders Northstar’s transloading terminal near East Fairview in western North Dakota.
The refinery is to be named The MonDak Plant, and it is projected to be a $250 million investment. According to Quantum Energy’s feasibility study, it will include a crude distillation unit, a mid-distillate hydrotreater, a naptha stabilizer, an amine unit, a sour water stripper, and a hydrogen generator unit.
It will be capable of processing 20,000 barrels of Bakken crude oil per day. 7,000 of these will be converted to diesel fuel and are intended for local use, significantly reducing the amount of oil imported to North Dakota. Currently, the closest source of diesel is a pipeline truck rack in Monatana, over 100 miles away. Some diesel is imported from as far away as Denver, or about 600 miles.
The plant will employ around 100 people and is expected to generate revenues in excess of $600 million and earnings of about $70 million annually.
The project follows Quantum Energy Inc.’s 2013 announcement of a planned refinery west of Dickinson in southwestern North Dakota. This plant, known as the Dakota Prairie Refinery, will be built on a 318 acre site and has served as the model for the MonDak plant. It too will produce 20,000 barrels a day, most of which are intended for local consumption, and employ around 100 people.
Construction on the Dakota Prairie Refinery began last year, and it is expected to open sometime in the fourth quarter of 2014. The total investment will be around $300 million.
Both refineries will employ their own plant manager and management teams, which will report to a governing board comprised of members of the parent company.
No refineries have been built in North Dakota since 1954, when Amoco opened a facility near Mandan. The facility was sold to Tesoro in 2001.
Hydroskimming refineries use a relatively simple petroleum production method: atmospheric distillation, catalytic reformation and chemical treatments to remove impurities and unnecessary constituents. The end products are gasoline, petroleum products like kerosene and surplus substances like sulfur.
No true refineries have been built in the United States since 1976, mostly due to environmental restrictions. A true refinery is capable of processing a wider variety of crude types, and of producing more diverse end products.