Californians investing in large new refinery in North Dakota

Fuel Fix:
Plans are moving forward to build the biggest new refinery in 40 years in the U.S. at a time when gasoline consumption is expected to break an all-time record in 2016.

California-based Meridian Energy Group is expected to begin construction soon on the planned Davis Refinery in North Dakota that would take advantage of the Bakken shale play and process up to 55,000 barrels of oil a day. The project comes on the heels of the 2015 opening of the 20,000-barrel-a-day Dakota Prairie Refinery that represented the nation’s first new refinery since 1976.

“The Davis Refinery will be one of the most modern, efficient and environmentally-compliant refineries in the U.S. in more than 50 years,” Meridian Chairman and CEO William Prentice said in a prepared statement, noting that Houston-based BASIC Equipment is contracted for fabrication and construction services.

The Davis Refinery is more substantial than the smaller, “teapot” Dakota Prairie project, said Patrick DeHaan, senior petroleum analyst for GasBuddy, which surveys and predicts gasoline demand and pricing.

“The economics behind refining have not always been favorable. There’s a considerable risk to open a refinery,” DeHaan said. “Everybody wants cheap gas, but nobody wants a refinery near them.”

Several other refinery projects in recent years have been held up by environmental concerns and protests by residents. For instance, Houston-based Rock River Resources hasn’t been able to move forward with plans for a Utah refinery for years.
I suspect the hostile regulatory environment in California had much to do with the placement in North Dakota as well as less expensive land costs.  It is another example of how California destroys jobs in unfavored industries.  It also explains why Californians pay as much as twice the price for gasoline as do those in other states like Texas.


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