In light of a pair of judges siding with Meridian Energy Group over environmental and regulatory challenges earlier this month, CEO Bill Prentice offered some insight via email into what the path forward for the Davis Refinery - and possibly the oil industry as a whole - will look like.
"In designing and permitting Davis, Meridian became aware of just how far behind the rest of the refining industry had fallen behind in such areas as modern information and control technology, environmental compliance and monitoring, overall project design and construction execution and the production of clean fuels," Prentice said. "The Davis Refinery can be seen as a prototype of the modern refinery, and represents a substantial amount of intellectual property and knowhow that Meridian intends to translate into additional refineries in other areas."
Controversy has hounded this refinery from the start due to its proximity to the borders of Theodore Roosevelt National Park-it is being built just 3 miles from the park's border. Despite challenges from multiple environmental groups, construction is already underway. Prentice did not discount the possibility of new lawsuits coming down the pipeline though.
"Litigation associated with permitting is the new normal in major energy projects such as the Davis Refinery," Prentice said. "Meridian will continue to face these challenges as they arise, and is confident that its technical expertise, careful preparation and execution and policy of full compliance will pave the way to success in this area."
None of this has delayed the project's construction timeline, Prentice said.
"The current legal situation has not slowed the project down - Meridian has initiated site preparation and grading at the Davis site, and is proceeding with design so that foundations work can commence in the spring of 2019," he said.
The Public Service Commission had been told by judges that they do not have jurisdiction on the refinery because its output is not quite high enough to qualify them. Randy Christmann, chairman of the PSC, said that following that ruling, the commission held a public workshop meeting with environmental groups and Meridian representatives in attendance.
"I thought that probably after that discussion we'd probably be at a point ... to make a decision on this," Christmann said in a phone interview. However, new claims being filed have given them pause.
"So the issue is brought up, these two environmental groups that have filed with us say it is more than 50,000 (barrels per day), so you should take this up," Christmann said. "Meridian responded that no, at one point we discussed going more than 50,000, but what we're building out there is less than (that)."
Christmann said the PSC is going to give Meridian time to respond to these latest challenges before they make any firm decisions. PSC's regulatory authority considers "general concerns" Christmann said, which run the gamut and can include cultural impacts and broader environmental impacts.
Looking beyond these challenges, Prentice said there's going to be many job opportunities for locals in the near future, with preference given to people in the area and veterans.
"Everyone forgets that Meridian was founded by the Davis Family Partners, a group composed of former North Dakota residents who had to leave North Dakota when they got out of school to find employment. Their objective was to create long-term, high-paying job opportunities for the residents of North Dakota so that other North Dakota families won't go through that experience," Prentice said. "Davis will employ hundreds of people, and the experience in Washington State indicates that the job multiplier is something like 12:1, so there will be thousands of jobs created by Davis over the next few years. Tom Johnson, who lives in SW North Dakota, heads up Operations for Meridian, and is putting together the hiring and training programs for Davis - Meridian will be hiring and training during construction and Meridian will emphasize locals and veterans in putting its operations team together."
A challenge faced by the energy industry in North Dakota is finding enough people with the proper training for the job. Prentice acknowledged that challenge and how Meridian would face it, with an emphasis on avoiding bad habits that have become the norm elsewhere.
"Meridian will of course be looking for experienced people but is also assuming that substantial training will be required to get everyone ready for first oil. Given a choice, Meridian would prefer to train up folks that have the right work ethic and are otherwise qualified rather than hire experienced personnel that bring the wrong kinds of industry traditions with them," he said. "This is a new kind of refinery and deserves a new way at pulling the operating team together. Among other things, Meridian has had discussion with a couple of the local colleges and universities, as well as with NDSU and UND, on various training programs."
One of the challenges recently dismissed was one from the Dakota Resource Council. Though that judge, Bruce Haskill, sided with Meridian, it was reported he was concerned about substantial changes made to the Davis Refinery plan since it received its conditional use permit from Billings County. Prentice elaborated on those changes, which were he said were largely made to bring the proposed refinery into accordance with the North Dakota Department of Health's air quality requirements.
"The award of the (Conditional Use Permit) in July of 2016 allowed Meridian to "fix" the location of the Davis Refinery for the purposes of air quality modeling and preparation of the air quality permit to construct ("PTC") application, which was filed with the North Dakota Department of Health in October of 2016," Prentice said. "Following the filing of the PTC application, Meridian made several design changes using more advanced technologies and modern catalysts, which included such decisions as switching from a fluid catalytic cracker to a hydrocracker, and which in general substantially reduced emissions from Davis, and which resulted in an amended PTC application being filed by Meridian in April of 2017."
The refinery had initially been planned to be built in phases, but as a result of the revisions to the design the plan ultimately settled on an immediate build with a single phase, to put the full refinery operating at 49,500 barrels per day.