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MDU Resources, Calumet partner on diesel refinery to process Bakken crude oil

MDU Resources Group Inc. (NYSE: MDU) and Calumet Specialty Products Partners LP (NASDAQ: CLMT) announced Feb.7 the formation of a joint venture to develop, build and operate a diesel refinery in southwestern North Dakota to process Bakken crude oil.

The joint venture, Dakota Prairie Refining LLC, will process 20,000 barrels per day of Bakken crude oil, according to the coventurers. Construction could begin this spring, and is expected to take up to 20 months. The plant will be located on a 318-acre site located west of Dickinson in Stark County, ND and is expected to employ approximately 100 people. Hiring and training of operating personnel is expected to begin in 2013.

MDU Resources Group’s participation in the joint venture will be through its wholly owned subsidiary, WBI Energy Inc.

The plant will employ its own plant manager and management team, who will report to a governing board composed of representatives of WBI Energy and Calumet.

“Through this joint venture we are continuing to expand both our midstream energy business and our vertically integrated investment in the Bakken oil play,” said David L. Goodin, president and CEO of MDU Resources. “There is a strong existing market for the plant’s production.”

“This joint venture allows us to continue our plan of diversifying into geographies with favorable feedstock options and niche product markets,” said Jennifer G. Straumins, president and COO of Calumet’s general partner.

The project has received support from the state of North Dakota.

The facility’s engineering and plant design are in the final stages. Westcon has been selected as the general contractor, and Ventech Engineering will be the primary equipment and technology provider. MDU Resources’ construction businesses, Knife River Corporation and MDU Construction Services Group, are among potential subcontractors. Other MDU Resources’ companies involved in the project include Fidelity Exploration and Production Company, which will supply some of the facility’s crude oil; WBI Energy, which will supply natural gas service to operate the facility; and Montana-Dakota Utilities, which will supply the facility’s electricity needs.

 


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