FIRST GRASS-ROOTS REFINERY IN U.S. SINCE DECONTROL TO FOCUS ON ULTRA-CLEAN DISTILLATE FUELS

Minot Daily News
6/18/2004

The Mandan, Hidatsa, Arikara (MHA) Nation of American Indians just announced that they propose to build the first U.S. grass-roots crude oil refinery since decontrol of oil prices over 20 years ago. They aim to produce the near-zero-sulphur fuels required by upcoming U.S. EPA regulations.

The 10,000 barrel/day refinery, on the Ft. Berthold Indian Reservation in Ward County, North Dakota, would tap Alberta synthetic crude from the nearby Enbridge Pipeline, or possibly local crude. Tesoro operates North Dakota's only other refinery (the 60,000 barrels/day former Amoco plant at Mandan).

MHA and Bureau of Indian Affairs (BIA) last month announced filing of an environmental impact statement (EIS) notice for the proposed refinery.

Meantime, MHA also hired Calgary-based Triad Engineering for front-end engineering & design (FEED) work.

According to Triad official Bob Woolley, the plant would employ hydrocracking rather than fluid catalytic cracking (FCC). That's partly for fuel-quality reasons (targeting near-zero sulphur and avoiding problematic light-cycle oil) and partly to avoid costly flue-gas emissions controls now required on cat crackers, Wooley explains.

The plant output mostly will be distillate (both highway and non-road diesel, as well as kero-jet) along with "some" gasoline, he said.

Triad also did the engineering work for Canada's last grass-roots refinery, the former Turbo refinery (30,000 b/d) at Balzac, Alberta, which opened in 1982, then shut down in the mid-1990s due to financial problems of the parent company.

Key to the new MHA refinery is "aggressive capex" control, Wooley told us. "They've estimated capital cost at around $100 million, but as part of the FEED we're trying to tie it down."

The MHA refinery would have the advantages of existing nearby roads, electricity and pipelines, along with butanes available by trucking. The plant "won't require much water" as it would be mostly air-cooled, similar to the earlier Turbo refinery, operating in a similar climate, he said.

Given that the plant will be owned by a native American Indian group, it will enjoy certain tax advantages not available to most corporations, as MHA spokesman Horace Pipe told us.

Jack Peckham