The Bakken Still Has Legs -- March 31, 2015

Updates

April 1, 2015: the more I thought about, the more I thought this might be the most important / most interesting story of the week, the story below about "the Dickinson refinery is not expected to stabilize diesel prices."

So many story lines. First, the "refinery" (more about that later) was completed at all -- the first new refinery in the US in decades. Second, the amount of diesel if produces is a "drop in the bucket" with regard to how much diesel North Dakota farmers use, especially at harvest. Third, it reminds us how vibrant / huge the North Dakota agricultural industry is. Fourth, the MDU-Calumet partnership and how that plays into the national refinery "grid" and CBR.

After the original post below, I received a nice note from Don. The note, heavily edited to fit the story lines follows:

The "Dickinson refinery" is technically a distillery and NOT a refinery. North Dakota state usage of diesel is 53,000 bpd and is expected to grow to 75,000 BPD in 2025. The plant will be referred to as a "topping” plant because it is an early stage refinery that refines only certain petroleum components found in the crude oil. As such, it does not meet the full definition of a refinery that processes all petroleum components found in the crude oil feedstock that comes into the plant.

"It’s called a ‘topping plant’ because, in essence, it strips out the easily refined components, processes them and ships the remaining components off to other refineries for complete processing,” he said. "Topping plant facilities are typically smaller than full-scale refineries and are usually located near the primary market for their key product.” 

What is not refined is put in tank cars and shipped to Superior Wisconsin, where Calumet has a refinery..   remember there is a CBR  unit right next to the MDU plant. 

Original Post

 

This is almost bizarre.

This AP story was picked up by the Washington Times: Dickinson refinery not expected to stabilize diesel prices.

Give me a break. This is a 20,000 bopd diesel refinery -- hardly a rounding error among US refineries. This was simply a local entrepreneurial story; someone saw a local need and took advantage of it. It took years to get it up and running -- although the fact that it was completed at all is probably the real story.

And this story gets picked up by The Washington Times -- must have been a slow day in DC on the day this was published.

The Washington Times/AP is reporting:

A new oil refinery near Dickinson is expected to begin operations within three months, but officials don’t expect it to stabilize the price of diesel fuel during harvest.

The Dakota Prairie Refinery is expected to produce nearly 300,000 gallons of diesel fuel each day. It will be sold locally, but MDU Resources Group spokesman Rick Matteson [says] that the amount is “a drop in the bucket” compared to the demand.

North Dakota State University Assistant Professor David Ripplinger also says the refinery will have little to no impact on what farmers pay for diesel, though he says it might help ease supply disruptions. 

Wow, even regionally it's a drop in the bucket. So, why didn't they build it 10x bigger? Let's hope this was a trial run -- time to think much bigger.

Again, I'm getting a feeling for just how big the energy picture is in North Dakota, not just the "Bakken," but the energy picture driven by agriculture.