North Dakota Refining Capacity Study

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According to a 2008 report issued by the United States Geological Survey, North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation. With the size and remoteness of the discovery, the question became 'can a business case be made for increasing refining capacity in North Dakota?' And, if so what is the impact to existing players in the region. To answer the question, a study committee comprised of leaders in the region's petroleum industry were brought together to define the scope of the study, hire ... continued below

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Hill, Dennis; Swenson, Kurt; Tuura, Carl; Simon, Jim; Vermette, Robert; Marcha, Gilberto et al. January 5, 2011.

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Description

According to a 2008 report issued by the United States Geological Survey, North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation. With the size and remoteness of the discovery, the question became 'can a business case be made for increasing refining capacity in North Dakota?' And, if so what is the impact to existing players in the region. To answer the question, a study committee comprised of leaders in the region's petroleum industry were brought together to define the scope of the study, hire a consulting firm and oversee the study. The study committee met frequently to provide input on the findings and modify the course of the study, as needed. The study concluded that the Petroleum Area Defense District II (PADD II) has an oversupply of gasoline. With that in mind, a niche market, naphtha, was identified. Naphtha is used as a diluent used for pipelining the bitumen (heavy crude) from Canada to crude markets. The study predicted there will continue to be an increase in the demand for naphtha through 2030. The study estimated the optimal configuration for the refinery at 34,000 barrels per day (BPD) producing 15,000 BPD of naphtha and a 52 percent refinery charge for jet and diesel yield. The financial modeling assumed the sponsor of a refinery would invest its own capital to pay for construction costs. With this assumption, the internal rate of return is 9.2 percent which is not sufficient to attract traditional investment given the risk factor of the project. With that in mind, those interested in pursuing this niche market will need to identify incentives to improve the rate of return.

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  • Report No.: None
  • Grant Number: FE0000516
  • DOI: 10.2172/1025123 | External Link
  • Office of Scientific & Technical Information Report Number: 1025123
  • Archival Resource Key: ark:/67531/metadc834273

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Office of Scientific & Technical Information Technical Reports

Reports, articles and other documents harvested from the Office of Scientific and Technical Information.

Office of Scientific and Technical Information (OSTI) is the Department of Energy (DOE) office that collects, preserves, and disseminates DOE-sponsored research and development (R&D) results that are the outcomes of R&D projects or other funded activities at DOE labs and facilities nationwide and grantees at universities and other institutions.

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Creation Date

  • January 5, 2011

Added to The UNT Digital Library

  • May 19, 2016, 3:16 p.m.

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  • Nov. 30, 2016, 1:08 p.m.

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Hill, Dennis; Swenson, Kurt; Tuura, Carl; Simon, Jim; Vermette, Robert; Marcha, Gilberto et al. North Dakota Refining Capacity Study, report, January 5, 2011; United States. (digital.library.unt.edu/ark:/67531/metadc834273/: accessed April 24, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.