Meridian inks product offtake agreement for Davis refinery

Meridian Energy Group Inc. has entered an agreement with Love’s Travel Stops & Country Stores Inc. subsidiary Musket Corp. for the long-term offtake of transportation fuel production from Meridian’s 49,500-b/sd high-conversion Davis refinery now officially under construction in Belfield, Billings County, ND, in the heart of southwestern North Dakota’s Bakken shale region (OGJ Online, June 30, 2020).

As part of the late-September agreement, Musket will purchase, market, distribute, and resell the entirety of Davis’ diesel (360 million gal/year) and gasoline (280 million gal/year) production for an initial period of 10 years beginning upon startup of the refinery, Meridian said.

Alongside possible term extensions, the agreement provides for the parties to establish similar offtake arrangements between the companies for Meridian’s future refineries, which currently include proposed manufacturing sites in the Permian basin of West Texas and near the US domestic crude collection-marketing hub at Cushing, Okla. (OGJ Online, Apr. 1, 2020).

Meridian—which aims to have up to 350,000 b/sd of clean-tech refining capacity in operation in 5-10 years—already has initiated siting and prepermitting design works for both the Texas and Oklahoma refineries, according to the operator’s website.

Based on a modular design that will result in the refinery having total emissions of one-eighth of industry average and less than one-half of the industry’s GHG emissions, Meridian’s Davis plant, once in operation, will produce ultralow-sulfur diesel and premium gasoline from prolific crude feedstocks from the Bakken shale basin using a suite of advanced technologies licensed by Axens Group intended to maximize operational efficiencies while minimizing environmental impacts.

Davis refinery status

In an e-mail dated Sept. 27, Meridian said that, while it continues to make steady and methodical progress on the Davis refinery—most recently scheduled to enter commercial operation during fourth-quarter 2023 at an estimated overall cost of about $1 billion—the project has faced delays related to impacts of coronavirus (COVID-19) impacts as well as now-resolved litigation matters.

Despite the setbacks, however, Meridian confirmed it let a contract on June 12 to an unidentified service provider to deliver engineering, procurement, and construction (EPC) for the planned refinery’s crude distillation unit. The EPC agreement—which represents a substantial portion of the refinery’s total installed costs—includes an option to fold in EPC of remaining units at Davis as CDU design proceeds, the operator said.

While it has yet to identify a definitive startup date for the Davis refinery, Meridian said work on the project for the next several months will focus on detailed design as well as procurement and fabrication of modules.

Substantial construction activity at the site will resume in 2022, when Meridian will begin work on foundations and other subsurface elements, according to the operator.