Meridian Energy plots grassroots refinery for Permian basin

Meridian Energy Group Inc. has let a contract to Winkler Cos. LLC to provide site control for a full-conversion refinery in Winkler County, Tex., in the heart of the Permian basin.

The Permian basin refinery, which will process local crude form the Delaware basin into a full slate of refined products for local and regional markets, will have a throughput capacity of about 60,000 b/d and be modeled after Meridian’s grassroots 49,500-b/sd high-conversion Davis refinery currently under construction in Billings County in the heart of southwestern North Dakota’s Bakken shale region, Meridian said.

With site control now established for the new Permian basin plant, Meridian said it will proceed with design and permitting of the newly proposed refinery that—like its Davis refinery—the operator intends will be permitted under classification as a synthetic minor source (SMS) of air contaminants (OGJ Online, Dec. 5, 2018; Dec. 6, 2017).

“Meridian’s success on the Davis [r]efinery demonstrates that the domestic refining industry is ready for fundamental change, and Meridian believes that the crude supply and strong demand from the refined products markets indicate that the Permian [b]asin is the next place for Meridian to locate a Davis-style crude refinery,” said William Prentice, Meridian’s chairman and chief executive officer.

Prentice said Meridian’s analysis indicates that there may even be a need for more than one such plant to fully serve the needs of the Permian basin.

The proposed refinery comes amid a growing need for regional refining capacity as well as additional crude storage and blending in the rapidly expanding Delaware basin, said Winkler Manager David Lynch.

“With [the International Maritime Organization’s 2020 regulations requiring reduced sulfur levels in marine fuels in 2020] bearing down on the US refining industry, Meridian could not be better positioned to take advantage of the building demand for [ultralow-sulfur diesel (ULSD)] that can be transported from this location by truck, rail, or pipe,” said Lynch.

Once the refinery is in operation, Indeca Crude Express LLC—a sister company of Winkler and regional crude hauler—will participate in the project by enabling gathering of trucked crude barrels as well as distribution of finished product to a ready market, Lynch confirmed.

Meridian has yet to reveal a definitive timeline for the newly proposed Permian basin refinery.

Davis refinery project

The North Dakota Department of Health’s division of air quality previously issued Meridian the final permit-to-construct the Davis project—under the first application in history for a full-conversion refinery of this size and complexity to seek and receive permitting to construct under classification as SMS of air contaminants—in June 2018 (OGJ Online, June 13, 2018).

Scheduled for startup sometime in 2020, the Davis refinery, once in operation, will produce ULSD and premium gasoline from prolific crude feedstocks from the Bakken shale basin using advanced technologies intended to maximize operational efficiencies while minimizing environmental impacts (OGJ Online, Dec. 7, 2018).

Contact Robert Brelsford at [email protected].