ND company proposes diesel plant near Williston

AP News
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Posted: Nov 27, 2009 9:18 AM

A Fargo company is seeking investors for a plant in northwestern North Dakota that would make diesel fuel to help run drilling rigs in the state's oil patch, but one oil industry official said it might be a risky business.

Mike Wavra, president of Dakota Oil Processing LLC, said his company wants to build the plant near Trenton, a town of about 100 people a few miles southwest of Williston. It would cost at least $180 million and provide more than 50 jobs in the area, he said.

The so-called diesel topping facility _ a sort of mini refinery _ would be built at the site of an abandoned natural gas plant, Wavra said. The factory could produce up to 567,000 gallons of diesel daily, using crude from the rich Bakken and Three Forks wells in the region, he said.

The diesel could be sold to farmers and oil companies in eastern Montana and western North Dakota, Wavra said. Diesel has been in demand with the boom in North Dakota's oil industry. One rig can use up to 2,000 gallons daily.

"We have commitments from producers to supply crude," Wavra said. "It sure seems like a good fit."

But Ron Ness, president of the North Dakota Petroleum Council, said fuel refiners run on a slim margin and need a steady market to generate enough income to pay back investors. North Dakota had a record 98 rigs working last fall, but the count dropped to about 30 early this year. Sixty-three rigs were operating this week.

"It seems like a simple idea but the economics are tough," said Ness, whose group represents about 160 companies.

Williston Mayor Ward Koeser said his city has given the diesel project organizers $85,000 for marketing studies and legal work.

Area leaders had been hoping to turn the region into an energy hub with a refinery, biodiesel and ethanol plants and a wind farm, Koeser said.

But most of those projects now seem unlikely, he said. Koeser called a 100,000 barrel-per-day refinery proposed by Northwest Refining Inc. of Williston a longshot and said Yellowstone Ethanol's plan for an ethanol plant just west of Trenton "is not as sexy as it was a couple of years ago."