FEATURE-Refineries sprout in North Dakota, bucking the trend

Wed Apr 10, 2013 6:59am EDT
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By Ernest Scheyder

DICKINSON, North Dakota, April 10 (Reuters) - On a windswept North Dakota prairie in late March, Governor Jack Dalrymple drove a bulldozer into the fertile black earth and broke ground on the first new U.S. refinery since 1976.

The state's two U.S. senators, as well as dozens of other politicians and investors, stood nearby wearing hard hats, eagerly sharing hopes that this new refinery will help resolve North Dakota's diesel demand problem.

Thanks to the Bakken shale formation, an extensive layer of oil-rich rock two miles deep, North Dakota produces more crude oil than any state except Texas. But because the state only has one refinery, it imports more than half of the roughly 53,000 barrels of diesel consumed each day by rigs that suck oil out of the ground, and trucks and trains that transport it.

That daily need is forecast to hit 75,000 barrels by 2025, making the new refinery from MDU Resources Group Inc and Calumet Specialty Products Partners critical for the energy sector in the state.

Despite producing thousands of barrels of oil each day, North Dakota relies on refineries on the U.S. Gulf Coast and elsewhere for much of its diesel. Dalrymple and others are counting on the MDU/Calumet project attracting a new wave of investors eager to construct Bakken refineries.

"Diesel fuel is something that's highly valued around North Dakota," Dalrymple, a Republican, said in an interview after the groundbreaking. "Refineries will allow us to use our Bakken crude right here at home."

When it comes to the economics and politics of building a refinery, North Dakota is an unusual case.   Continued...