Some Questions for the Refinery People

NDCC 49-22.1-02  “Statement of policy. The legislative assembly finds the construction of energy conversion facilities . . . affects the environment and the welfare of the citizens of this state. It is necessary to ensure the location, construction, and operation of energy conversion facilities . . . will produce minimal adverse effects on the environment and the welfare of the citizens of this state by prohibiting energy conversion facilities . . . from being located, constructed, or operated within this state without a certificate of site compatibility  . . .  The policy of this state is to site energy conversion facilities . . . in an orderly manner compatible with environmental preservation and the efficient use of resources. Sites and routes must be selected to minimize adverse human and environmental impact . . .”  (emphasis added)

That’s the section of North Dakota’s Century Code–our state laws–as it applies to the construction of oil refineries in our state.  Unfortunately, the law goes on to say that the only  “energy conversion facilities” to which this law applies are those refining more than 50,000 barrels of oil per day. That’s a lot.

And there’s the rub.

The North Dakota Public Service Commission is meeting at 9 a.m. Tuesday on the 12th floor of the State Capitol Building with the CEO of the company that wants to build a refinery three miles from Theodore Roosevelt National Park, and which now says it plans to refine only 49,500 barrels per day—500 barrels under the limit which would require them to get a “certificate of site compatibility” from the PSC. Well, as the Church Lady on Saturday Night Live used to say, “How conveeeeeeeenient!”

Some oil refineries look like this. This is the view of Exxon Mobil’s Baton Rouge refinery, as seen from the Louisiana State Capitol Building, looking north.

Our Public Service Commissioners don’t like people playing games with our state laws, so they have asked to meet with the company Tuesday morning. To their credit, the company agreed to come in and talk. And answer some questions.

You can be there too. Thanks to North Dakota’s Open Meetings Law, these kinds of things are open to the public. Not that the PSC gave any consideration to closing them, to my knowledge. You won’t be allowed to participate, though. Just watch and listen. I wish we could participate, because I have a few questions. I have a couple new friends, named Laura and Pat, who live within a couple miles of the proposed refinery and they’ve been sending me information about the project.

For instance, they tell me that Tesoro, which owns the refinery down the railroad by Dickinson, just bought all the gathering pipelines in the area, and my friends are wondering if that means there won’t be any crude oil delivered to this new refinery by pipeline. They’re thinking, and I think they’re right, that Tesoro is not going to be too eager to share a pipeline with a rival refinery. Tesoro, by the way, has changed the name of their company to Andeavor. I think they’re trying to get us to forget it was their pipeline that spilled almost a million gallons of oil up in northwest North Dakota four years ago, oil which is still not completely cleaned up.

If that’s the case, the only way the refinery will get 49,500 barrels (a little more than 2 million gallons) of crude oil to refine every day is by truck. That’s a lot of trucks. A tanker truck can hold up to 9,000 gallons. That would be more than 225 trucks per day. If they won’t have the capacity to unload ten trucks per hour at the new refinery, imagine how long those lines are going to be idling at the refinery gate. 24/7.

My friends pointed out that the refinery says on their website “Davis will ship high-value products to local & regional markets – not all products go to the same place. Some markets are close enough for local truck delivery, others will be served by accessing product pipelines.” Well, that’s a few more trucks every day, this time going out, instead of in.

And that brings back the pipeline question—whose pipeline will they be using to ship that refined product out, the stuff that doesn’t go by truck? There’s no mention of shipping by railroad, which would seem to make sense, since the BNSF main line runs right past the refinery. Are there any plans to ship by rail? (My friends out west tell me the latest design plan for the refinery doesn’t show a railroad spur.)

My friends also pointed out that the company’s website says “Flare stacks will be equipped with air assisted blowers to help ensure cleaner complete combustion of flare gas and smokeless operation. Flare emissions will be analyzed by monitoring equipment.”

Huh? Flare stacks? Let’s hear a little more about those. How many? How tall? How will they compare with oil well flares we’re all familiar with, which light up the countryside all over western North Dakota? They are really, really noisy, much like the sound of a jet engine. And bright. Candles in the wind.

And then my friends pointed out that the company’s website says they are “negotiating options on additional property that would increase the size of the Site to nearly 2,000 contiguous acres. The Refinery will not be the only facility operating on the site.” A little more explanation of that would be welcome too.  What else is planned?

My friends and I are just asking those kinds of questions because it would seem to us that the answers might have some impact on those “adverse human and environmental impacts” that Section 49-22.1-02 of the North Dakota Century Code refers to. Especially for those people that live within a mile or two of the refinery. I guess we hope the Public Service Commissioners will ask those kinds of questions at Tuesday’s meeting.

There’s one more thing my friends pointed out in the company’s stock offering that bothers me. The stock offering says “the company intends to achieve a liquidity event either by a public listing of the Shares, such as through an IPO, or by sale of the Company, following the start-up and full production of the Refinery, projected to be within 3 to 5 years.”

Now I’m an English major and don’t know a lot about the world of high finance, but I read that to mean that the refinery will be built on borrowed funds, and that the company might have to sell the refinery to get out of debt. Well, that ought to make lenders a little nervous. I wonder if any North Dakota banks are involved in financing this operation. Our bankers here are pretty shrewd. Want to take bets on that?

Tuesday, December 19, 9:00 a.m., 12th Floor, North Dakota Capitol Building

4 thoughts on “Some Questions for the Refinery People

  1. When BIG BUSINESS comes to town demanding corporate ‘rights’ to ND State resources, North Dakota bureaucrats are able to circumvent any ‘awkward’ constitutional guideline intended to insure the safety of ordinary folks and the value of their deeded property. We just keep paying taxes to help create the lie that these few unelected commissioners actually represent us.

    http://news.prairiepublic.org/post/legislature-looking-changes-permitting-out-state-nuclear-waste-disposal#stream/0

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    1. I believe that when we look a little closer into the alliances between big business and career politicians, we will find both parties equally corrupt.

      A single elected representative may have all the honest intentions in the world, but then, the truly honest ones aren’t usually put on the ticket.

      Those actually elected – from either party – may have feeble concepts of right & wrong until some monetary incentive causes them to figure 1 ‘right’ will balance the outcome of 9 ‘wrongs’ that is, of course, if the ‘right’ promise or outcome is well publicized.

      Sometimes they don’t even have to be bought. Catch them in a seriously embarrassing situation and they are led about as docile as bottle fed lambs.

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  2. Excellent points! I look forward to learning the results of the hearing.

    Very good point, Jim, that the business proposing the refinery wouldn’t even have the infrastructure (pipelines, rail transportation agreements) in place to receive the product, then transport it to market. Has the business proposing the refinery ever built a refinery? Since a refinery is already located in Dickinson, is there even a need for a second refinery?

    In the 1980s and 1990s, when I lived in western North Dakota, the huge gas flares that make so much noise were much smaller. That gas is a natural resource.
    My perception is that oil production in North Dakota these days is occurring in a winner take all environment. There are alternative forms of energy out there that are much more in synch with North Dakota values, like wind power and solar power.

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