N.D. oil refinery $50M over budget but still on track for December startup

BISMARCK – An oil refinery being built in western North Dakota is about $50 million over budget but remains on track to start refining crude in December, a project official said Tuesday at the Williston Basin Petroleum Conference here.

The Dakota Prairie Refining facility under construction four miles west of Dickinson will process 20,000 barrels of oil per day to produce diesel fuel and other products for MDU Resources and project partner Calumet Specialty Products LP.

John Stumpf, senior vice president of business development for WBI Energy Inc., a subsidiary of MDU Resources, said they initially thought they could build the plant for $300 million, but the final cost will be around $350 million.

Construction started in March 2013, and the plant is about 60 percent completed, Stumpf said. Thirty-nine of the 40 plant operations jobs have been filled, as have four of five shift supervisor positions and the senior management positions, he said.

“Today, things are looking good, so I’m smiling for the first time in months, myself,” Stumpf said.

Lynn Helms, director of the North Dakota Department of Mineral Resources, noted the plant will be the first greenfield refinery built in the United States since 1976.

It will produce about 7,000 barrels of diesel fuel per day that will be marketed locally, said Todd Borgmann, Calumet’s vice president of business development. Western North Dakota has seen a surge in truck traffic with oil and gas development, and Borgmann said he’s confident the refinery will find a market for all of its No. 2 diesel.

“We’ve got quite a bit of interest out there,” he said.

The refinery also will produce about 6,500 barrels per day of naphtha, which will likely be shipped to Canada by railcar for use as a diluent for heavy Canadian crude oil, Borgmann said.

Naphtha is a generic term used to describe refined or partly refined light distillates from petroleum. They’re blended or mixed with other materials to make high-grade gasoline or jet fuel and also are used as solvents, according to the U.S. Energy Information Administration.

Borgmann said the naphtha shipped by rail from the Dickinson refinery will be “stabilized” by stripping it of natural gas liquids, “making what’s left a lot less problematic.” Such products already are being shipped by rail, and special railcars have been ordered to haul it, he said.