BISMARCK — North Dakota regulators have determined that an oil refinery slated for construction near Theodore Roosevelt National Park has made enough headway to retain its coveted environmental permit after the developer twice took extensions on the commencement of the project.
The proposed, financially troubled Davis Refinery has experienced multiple delays since state environmental regulators permitted the Houston, Texas-based Meridian Energy Group to build the facility in 2018. The North Dakota Department of Environmental Quality first allowed the company an 18-month extension on its permit after the refinery stalled during litigation with environmental groups, and, before the second deadline expired on June 12, state regulators granted the project an additional 90 days to start construction or risk forfeiting its permit.
This time, Meridian met the state's requirements for beginning construction ahead of a revised deadline Sunday, Sept. 12, allowing the company to keep its permit active.
In a late August letter, Meridian CEO William Prentice informed the Department of Environmental Quality that his company had entered into a binding contract with McDermott, an engineering firm also based in Houston, for the construction of the facility's crude oil processing units. Prentice said in the letter that termination of the contract with McDermott would result in substantial forfeiture of money amounting to about 10% of the total project costs, which the company has estimated at north of a billion dollars.
Department of Environmental Quality environmental engineer David Stroh said that with this contractual commitment, Meridian has met the “pass ‘Go’” benchmark for their project and can retain its construction permit. Following this milestone Meridian no longer faces a formal deadline, Stroh said, but the Department of Environmental Quality will hold routine check-ins with the company to ensure that the project is moving ahead.
In a statement, Prentice called the Department of Environmental Quality's decision an important milestone for the project. He acknowledged delays over the last few years but said Meridian has made "steady and methodical progress" on the refinery.
Next steps for the Davis Refinery will include design work and the procurement and fabrication of facility modules, all of which Prentice said will happen off site. As a result, western North Dakota residents should not expect to see development at the refinery site 3 miles east of the Theodore Roosevelt National Park's southern unit until next year, when the company said foundation work will begin.
Since its initial proposal, the Meridian project has been a flashpoint for environmental groups opposed to the construction of a refinery so close to North Dakota's only national park. Opponents of the project have frequently raised Meridian's track record of delays, unpaid bills, and lawsuits — including one brought by former employees in a Texas court alleging that the company had failed to pay them wages and bonuses — to question the project's viability.
To retain its permit, Meridian needed to either begin physical construction by the deadline or prove that it had entered into a major construction-related contract. Aside from some preliminary dirt work, the site of the proposed refinery has remained mostly undisturbed since the project was first permitted.
Stroh noted that concerns about the financial well-being of Meridian fall beyond the Department of Environmental Quality’s purview.
"We don't really get to make a subjective decision here," he said. "They showed that they satisfied the law. (Now) they've got to continue to maintain progress."
Stroh said that although Meridian does not face looming construction deadlines, the company will be expected to complete the project "in a reasonable amount of time." Stroh said he would expect a refinery of this magnitude to take at least three years to complete.
Because the permitting of new refineries can be highly rigorous, the oil industry has traditionally relied on updates and expansions to existing facilities around the country. Davis would be the first new refinery built in the U.S. since 1977, and would process 49,500 barrels of Bakken oil per day.
Prentice has said his company will rely on technological advancements from recent decades to build "the world's cleanest refinery."
Readers can reach reporter Adam Willis, a Report for America corps member, at firstname.lastname@example.org.