Tribes Plan For $81 Million Oil Refinery

By Dave Kolpack, Associated Press Writer
The Associated Press
01/14/2003

New Town, N.D. (AP) _ Tex Hall's cowboy boots kick up dust as he walks across rugged prairie that is barely suited for cattle. The chairman of the Three Affiliated Tribes sees this land as the home of an $81 million oil refinery.

It's a project Hall says will do more for the economy of the Fort Berthold Indian Reservation than any casino.

"It's way bigger," he said.

The reservation has the space and the work force, as well as sites with reasonable access to the Tesoro pipeline and the Burlington Northern Santa Fe railroad, Hall said. And the topography is ideal, said Horace Pipe, a geologist working with the Bureau of Indian Affairs.

"Of course you're worried about spills, you're worried about population, you're worried about children," Pipe said. "But look around ... there's not much here."

The refinery would have 65 employees, mostly "middle to upper income level jobs," Hall said. "You're talking about electricians, welders, pipe fitters, computer people, lab people," he said.

The project already has some federal support. The Department of Commerce is giving about $1.3 million as part of an Economic Development Administration grant. Hall said the BIA is contributing $500,000.

Most of that money will go toward a $1.4 million Front End Engineering Development (FEED) study that will determine specifics of the project, Hall said.

"The FEED will look at the market, the resources, electricity, cooling systems, personnel, environment, raw resources ... everything," said Gary Beaudry, the tribes' lawyer. "All of those questions, from our preliminary work, indicate to us that it's a go. But the experts will tell us and we'll know within a year or maybe within eight months."

The study also will recommend one of four sites. Hall favors one near Parshall, a town of 800 in the northeast corner of the reservation, especially since the casino is in New Town.

"When you look at Parshall, the town is on the decline," Hall said. "We've lost a lot of people and the people who are there are older. This could really rejuvenate the town."

Hall said the refinery would start on a small scale, producing 10,000 barrels (about 315,000 gallons) of fuel per day. That would not compete with the Tesoro refinery in Mandan, which has a capacity of 60,000 barrels per day, he said.

A refinery spokesman did not return calls seeking comment.

Hall's plan is ambitious, including the use of wind energy to help power the plant, and the production of propane, butane, gasoline, jet fuel and diesel fuel. Hall said most of the reservation homes are heated with propane.

"No tribal member should ever have to pay for propane ever" if the refinery is built, he said.

Even ethanol production is a possibility.

"We've got close to 200,000 acres we can till up and produce crop for ethanol," Hall said.

The FEED study will look into potential customers. Hall said he is checking into contracting with the Minot Air Force Base for jet fuel.

Last November, Hall received a letter of support from Lance Morgan, president of Ho-Chunk, Inc., the economic development wing of the Winnebago Tribe of Nebraska. Morgan said Ho-Chuck operates a gasoline distribution company and chain of convenience stores and buys 100,000 gallons of gasoline per day.

"We would certainly prefer to purchase our gasoline from another tribally owned facility and have recently purchased property with a railroad connection in anticipation of setting up a fuel storage and transfer facility for tribally refined gasoline," Morgan wrote.

In April, the state of Kansas issued misdemeanor arrest warrants for Morgan and Winnebago Chairman John Blackhawk for failing to pay fuel taxes. The Winnebago tribe has since filed a $1 million lawsuit against Kansas state officials for ignoring Indian sovereignty.

The Fort Berthold refinery would be built by Triad Project Corp. of Linden, Utah. Engineer and company founder Bob Woolley is designing the facility, which he says will be the first "grass roots" refinery built in North America in 20 years.

"Over those past 20 years, environmental pressures have been such that existing refineries have been obliged to clean up their act," Woolley said. "That's where they have invested their dollars.

"The government has been so hard on the majors," he said, "that we need refining capacity."

Hall said he has heard little opposition to the refinery.

"We had meetings in New Town and Parshall and there was only one person who raised any objections," he said. "I talked to a couple of elders and they were like, 'Get it done.' You have one federal agency granting you $1.3 million and another federal agency granting you $500,000. Those are once in a lifetime deals."

Scott Fry, a spokesman for the Dakota Resource Council, an environmental group based in Dickinson, said his organization does not have an official stance on the refinery, but he said it could be another source of sulfur dioxide pollution in the state.

Pipe said improvements in technology allow for a cleaner-burning fuel with lower sulfur content than that produced in the current refineries. "You do have to follow EPA regulations, that's the bottom line," Pipe said. "It's like comparing a 2002 truck to a 1970 truck. The 1970 truck is loud and you can see a ton of exhaust. There's barely any exhaust from a 2002 truck."

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