Construction underway in North Dakota for first new refinery in lower 48 states since 1977

Amazing.

RBN Energy has a report, If You’ve Got the Money We’ve Got the Crude – new Refineries in North Dakota, that explains

North Dakota’s only refinery produces less than half the diesel the State consumes. To help remedy that disparity the first new refinery to be built in the Lower 48 since 1977 is under construction today and two more new refineries are planned.

Very cool. There is more demand for diesel in the state than the one refinery there can produce.

Here’s my simple summary: 

The economic and chemical conditions are right to support new refinery capacity in the state.

Oh, notice that would be the first refinery built in the continental US in about 35 years? I guess that means that would also be the second and third built are in sight since they are in the permitting stage.

The economics support the new refineries because of the reduced transportation costs and the spreads in prices there compared to elsewhere. The oil industry can use lots of diesel fuel so it makes sense to build capacity there and save the cost of hauling the oil elsewhere and trucking back the diesel.

The technical details of refining are beyond my ability to grasp. If I get the point of the article, the type of oil in the Bakken is ideal for the type of refinery that produces mainly diesel. So it is a good place and time to put in new capacity.

The article says these specialized refineries are less expensive to build, costing hundreds of millions instead of billions. Yet the payoff will require 20 or 30 years.

So the commentary I see is that some really smart people are willing to risk a few hundred million bucks on Bakken being a generation long run.

Looks like I took long enough to get this post on-line to mention that the Three Affiliated Tribes have blessed the ground and held a groundbreaking ceremony for the second of three refineries. See Tribe breaks ground on refinery.

Very, very cool.

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