Whither the Refinery?

I can’t quite figure out what is going on with the proposed refinery that Meridian Energy Group says it is going to build next door to Theodore Roosevelt National Park.

Just about exactly two years ago this week, a company called Martin Construction from Dickinson, just down the road from the park, went into the field behind Belfield farmer Greg Kessel’s place with some big yellow equipment and leveled about 100 acres and built a huge, 10-foot tall earthen wall around it.

Martin was a subcontractor for a company called SEH Design/Build, who had been hired by Meridian to manage construction of the refinery. Late last year, SEH filed a mechanic’s lien against Meridian for nonpayment of the $2.3 million contract to do the work. I don’t know if either Martin or SEH has a current relationship with Meridian, because no one from the companies will talk to me. But I’m pretty sure they haven’t been paid yet. The Billings County Recorder told me last week the lien is still in place.

When the wall was built, Meridian put up a big sign between the wall and the road that read “Future Home of the Davis Refinery.”

Davis-sign
Refinery site Fall 2019

Then they started issuing press releases, a process that’s been going on for about 18 months now. Here are the headlines:

“Axens NA Signs Contracts with Meridian Energy Group for Final Process Designs for Davis Refinery” – September 2018

“Meridian Signs Agreement with McDermott International to be Davis Refinery FEED Contractor” – October 2018 (Note: McDermott has since declared bankruptcy–maybe they didn’t get paid either.)

“Meridian Engages Morgan Stanley for Davis Refinery Project Financing” – January 2019

“Meridian Energy Group, Inc. Signs LOI with a Major Midstream Firm for Logistics Facilities in Support of the Davis Refinery” – February 2019

“Meridian Energy Group, Inc. Announces Agreement with Emerson as Control and Automation Systems Provider for the Davis Refinery” – May 2019

“Meridian Energy Group, Inc. Announces Agreement with Watco Companies as Rail Logistics and Management Services Provider for the Davis Refinery” – June 2019

“Meridian Energy Group, Inc., Announces Agreement with Pinkerton as Security and Risk Management Provider” – March 2020

“Meridian Energy Group Selects Wood as its Operations Readiness and Assurance Partner for the Davis Refinery” – April 2020

“Meridian Energy Group, Inc. Announces Engagement of Kirkland & Ellis as Principal Legal Advisors for the Davis Refinery” – April 2020

Wow. Bankers, lawyers, engineers, security guards, railroads, pipelines—you name it, they’ve got an agreement. In fact, they’ve got everything, except . . . a refinery.

Oh. And they still haven’t bought a piece of land to put it on. In fact, that part of the story is kind of funny.

Meridian was a startup company six or seven years ago, with no money, but an idea. Slick talkers, they found a farmer just west of Belfield named Greg Kessel who kind of liked being a big shot in his community. They made a deal with him. They took an option on some land he owned and put him on their board of directors.

According to documents in the Billings County Court House, “On or about March 22, 2013,” a California company called Middletown Farm & Cattle Company entered into a two-year option agreement with Kessel to purchase 176 acres of land, the land where the proposed refinery is to be built. The option agreement, filed in the Billings County Court House,  also includes 480 acres adjacent to the refinery site, on the west side of the site. I have no idea who this “Middletown” group is, but it appears to be a front or an agent for Meridian. The address on the Billings County Court House document said:

Middletown Farm & Cattle Co., LLC

c/o Meridian Energy Group Inc.

2070 Business Center Dr., Suite 160

Irvine, CA 92612

(949) 207-3815

That’s the same address and phone number listed on Meridian’s website as their “Finance and Administration” office (more about their “corporate office” address in a minute). All of the documents referring to Middletown list a fellow named Michael J. Browning as the “managing member” of the LLC.

That was in 2013. Then it gets funny:

“On or about March 22, 2015,” (exactly two years later, as the option was expiring) they filed the “First Amendment” to the agreement for a one-year option extension.

“On or about March 22, 2016,” they filed a “Second Amendment” for a 90-day option extension.

“On or about June 23, 2016,” they filed a “Third Amendment” for a 180-day option extension.

“On or about December 23, 2016” (2016 was a busy year) they filed a “Fourth Amendment” for another 180-day option extension.

“On or about June 21, 2017,” they filed a “Fifth Amendment” for another 180-day option extension.

“On or about June 21, 2018” (about 6 months late—somebody goofed) they filed a “Sixth Amendment” for a 332-day option extension.

“On or about May 19, 2019” (whew, just in time) they filed a “Seventh Amendment” for a 250-day option extension.

“On or about August 17, 2019” they filed an “Eighth Amendment” for another 250-day option extension.

Eight times they’ve asked Mr. Kessel to extend their option to buy his land. Eight times he’s said yes. Good grief. The only money changing hands on this deal is the filing fees going to Billings County.

Then, in a new document filed at the Billings County Court House a month or so ago, it appears that “Middletown” and Michael J. Browning decided to get out of the mix between Kessel and Meridian, and Browning turned over the option to Meridian directly, getting himself out of the middle. It says that “On or about January 10, 2020,” Meridian gets the rights to the option, with another 250-day extension.

So between now and September 17, Meridian has the option to buy Kessel’s land. Or get a “Ninth Amendment” to the option extension. Which do you suppose is more likely?

The selling price on the land is about $2 million. The refinery is projected to cost about $900 million. That’s the money they hope to get from Morgan Stanley. We’ll see.

So who’s this guy Michael J. Browning, anyway? Best I can tell is he’s some kind of an agent, living in Middletown, California. I’m surprised Meridian didn’t send out a press release announcing an “agreement” with him back in 2013.

Meanwhile, back to Meridian’s “corporate office” I mentioned a little bit ago. It’s kind of an interesting story too.

At the bottom of their website, Meridian lists five different “contact” resources, one for Finance and Administration in California, one for Engineering and Operations in Houston, Texas, one for Investment Opportunities listing phone and fax (Fax? Really?) numbers and an e-mail address, one for media inquiries with a New York phone number, and finally, their “Corporate Offices,” located at 13252 37th St. SW, Belfield, ND 58622.

I’ve been curious about that Belfield office all these years since I started writing about the refinery project, so last time I went to the Bad Lands I decided to stop in Belfield and see if anyone was in the office. Turns out there’s no such address. The closest I could come was Greg Kessel’s farm, at 13261 37th St. SW. (You know you live in rural North Dakota when your address is bigger than your cousin’s in Minneapolis.)

So when I got home, I tried the phone number listed for the corporate offices on the website. It was a Minnesota area code. But I got an answer, a young fellow named Todd, and sure enough he knew where it was. It’s Greg Kessel’s seed cleaning operation across the road from his farm, just west of Belfield. There’s a steel pole barn-type building over there, and the office, I was told, is in that building. So I’ll stop in and see if anyone’s home next time I go that way.

But I noticed something else when I was out there last week. Remember that sign beside that big dirt wall announcing the future home of the refinery? It’s gone. So is a big chunk of the wall.

Davis sign gone
Refinery site May 2020 – No sign, no wall.

And someone had gone in with farm equipment and disked up the entire site. I don’t know if they seeded anything, but last year the area was so full of weeds the neighbors were complaining, so it’s possible they’ve done something there to control the weeds this year. Maybe a cover crop. We’ll see as spring turns to summer.

Davis disked
Refinery site, newly disked and maybe seeded, Spring 2020.

In any case, it doesn’t look like they plan on building anything there again this summer, putting them even further behind schedule. One of the things I came across in my files this week was a story by Lauren Donovan (remember her?) in the Bismarck Tribune, dated January 27, 2016, quoting Meridian’s vice president of business development, Fred Bloom, as saying the company’s plan is to finalize engineering plans and begin construction on the refinery that summer (2016), and be selling diesel within two years. Let’s see, that would be 2018.

Now the company is saying maybe 2023—five years later.

That vice president, Fred Bloom, by the way, has moved on. Corporate officers change pretty frequently at Meridian. He’s now CEO of a company called New Coastal Group which sells CBD oil, a marijuana derivative with, some believe, magical healing powers. When I took a look at Meridian’s website to see if he was still there, I noticed that he was gone, but the company now has pictures and biographies of  twelve vice presidents on their Executive Team web page. Wow. That’s quite something for a company that hasn’t generated a penny in revenue except from investors. One of my company callers said they couldn’t figure out where the $40 million had gone that the company claims to have raised so far. I’d say 12 vice presidents could spend a lot of it.

(Aside: In addition  to the 12 vice presidents,they also have a “Senior Risk Management Advisor” named John Cloward whose bona fides include the fact he used to work for “Exxon Mobile” (with an “e”).

Finally, today, I want to talk a little more about phone calls I’ve been getting. I wrote a while back about a whistleblower who called to tell me all design work on the refinery had stopped because Meridian hadn’t paid its engineers, and that employees were going without paychecks.

I also talked to an investor who had put his whole 401(k) into refinery stocks, and hadn’t seen any return on that investment, although he hoped to soon be “half a millionaire.” The company is still seeking out small investors. Right at the top of their website is a link to a page offering an “investment opportunity” which says investors stand to reap “handsome rewards” of up to 40 per cent.  In the last two weeks I’ve talked to two North Dakotans who told me they’ve recently had calls from Meridian’s boiler room phone bank, asking them to buy stock.  Both said “No, thanks.”

I got another phone call a while back from someone who used to be a vice president of the company, asking for my e-mail so he could send me a document, if I promised to protect his identity. I said sure, and gave it to him.  He sent me a copy of that letter of agreement between the big Wall Street banker Morgan Stanley and Meridian, in which Morgan Stanley said they would provide financing for the refinery. The only thing I could find of interest in it was that the agreement was set to expire last December, so I called him and asked him if there was an existing agreement between Morgan Stanley and Meridian, and he said he did not know.

Then a strange thing happened. I got another e-mail from him, with an Excel file attached, and kind of an apocryphal note that said he had gotten this offer but was burning it, piquing my interest. I started to open it, but my computer said something like “Dude, don’t open this, it’s got a virus attached to it.” I called in my IT manager, Lillian, who had installed anti-virus software on my computer (thank goodness), and she immediately discarded the entire e-mail.

I was a little suspicious that I was being set up, but I did send this fellow another e-mail telling him what had happened, and asking if he could send whatever it was in a different format, because there was something bad attached to the file he sent, but I never heard from him again. Go figure.

Well, now you know pretty much everything I know about Meridian Energy. Are you as suspicious as I am?

 

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