Meridian Energy Group has been using the Environmental components to tell their story through Social events and issues by using transparency and other Governance methods.
This is something CEO William Prentice has been very passionate about since Day One. Being transparent about the environmental advancements their company has been making cleaning energy everyday. (transcript of interview below)
Personally, I believe it is the future of oil and gas projects because it involves a method of trust and transparency the industry has rarely displayed to people outside the industry.
That last sentence, by the way, is one of the root causes behind the last decade of oil and gas issues. No matter what industry leaders say on social media or at the industry mixers, connecting with people outside of the industry is the root cause of oil and gas’ woes, and this disconnection was happening well before any Biden or Obama rules or before the States Gone Wild regulations amped up.
The “disconnection” topic is one all on it’s own, but until then, let’s focus on a company who had the vision to implement an ESG strategy and has released their SECOND ESG Report. Their commitment to connection is a very important part of the ESG strategy and story.
The company is Meridian Energy Group and they are building the Davis Refinery in the Bakken oil field outside of Belfield, North Dakota, next to the major trucking artery Highway 85. (Side bar, Highway 85 is so important to the future of the United States, there was a successful lobbying effort to name it the Theodore Roosevelt Expressway. Humanized Highways are generally funded well.)
In addition to the Davis Refinery, Meridian Energy has plans for a second refinery named the Walton Refinery in Winkler County near Kermit, Texas and a third to be announced in Oklahoma sometime in 2022.
Since 2015, I’ve had regular conversations with William Prentice, CEO, Meridian Energy Group regarding the Davis Refinery and their behind-the-scenes battles. In fact, for several years we did a daily update on The Crude Life Week In Review newsmagazine radio program, which aired across all the counties the Davis Refinery is being built in.
The radio was an important component to their strategy because reaching people in the community outside the echo chamber of social media and industry networking events was paramount to their strategy. As were the local newspaper and television stations with local community news.
They’ve also been one of the early adaptors of ESG investing. What I find humorous about ESG is that so many leaders in oil and gas ignored it and or rejected it for ten years. And anyone trying to work with both sides through civility, was either caught in the crossfires of polarizing political discourse or spitefully scorned by industry leaders for not having a herd mentality.
Ironically coincidental in this example, the leadership and lawmakers in the state of North Dakota spited and despised ESG so much they tried to make it a state law to divest from anything ESG. It passed one or two chambers, but then quickly was torn apart into failure when they realized the reality of how far along ESG was.
So if you were anyone trying to have a civil discussion about ESG in many areas of industry and North Dakota, the reactive nature of the climate then (and now) was (and is) not warm or pleasant. North Dakota wanted nothing to do with ESG. But now that there’s profit and money involved, state officials are already at the front of the line getting federal ESG money not even a session removed from trying to divest themselves from it and shunned those trying to educate the industry on it. Again, that’s another ESG University Classroom Column for another day.
With that said, it is without a shadow of a doubt, that I truly look at what Meridian Energy (and even The Crude Life) did as authentic leadership in industry. This is not a brag or boast, rather a reporting of a documented body of work. And this body of work is not done as more layers of context are added all the time with columns like this and other speaking engagements from Meridian’s staff as they continue to clean the planet through innovation.
Prentice and the experts he lined up to discuss the construction and due diligence of the cleanest refinery on the planet is and truly was awesome. There was so much of this project that will be read about in history class by my grandchildren, and I was on the front line of it all – from refinery reporting to the ESG evolution.
It was William Prentice’s understanding of the energy industry, environment issues and what can only be called an existential understanding of ESG that made much of this project happen.
What is interesting about Meridian Energy’s ESG Strategy from the start, was the behind-the-scenes due diligence leading up to their breaking ground. So much of it is noteworthy, but specifically, what Meridian Energy Group, Inc. is doing to tell the story of the environment is astoundingly amazing. Literal meaning there of the word amazing. I mean they used a kite, more to come on that in a moment.
But first, one example of proactive environmental management was their collaboration with a variety of agencies regarding wildlife and the immediate environmental impact. Talk about jumping into the frying pan out of the gate for an oil and gas company. That little sage grouse has probably stopped more energy projects than Greta Thunberg and the Sierra Club combined, so the endangered species issue is no cream puff step in the process for an energy project.
“Part of this process is that the county is wondering what is going on with the cultural resources, what’s going on with endangered species,” SEH Project Manager Dan Hedrington said. “We contacted federal and state agencies that are in charge of wildlife, specifically US Fish and Wildlife and North Dakota Game and Fish, and they did a database research on their system and found that there were no impacts to threaten any endangered species.”
OK now the Kite Test I spoke of. This was yet another due diligence and permitting example that stood out in the Davis Refinery’s Total Transparency. There was extra pressure on the refinery due to the proximity and geographical location of Theodore Roosevelt National Park.
The reason we used the word “amazing” earlier, is because out of all the tests and satisfactions needed to construct a greenfield refinery, this one takes the cake in creativity, resourcefulness and ingenuity.
Project management company SEH and Meridian wanted to ensure the refinery’ crude columns of steam could not be seen from Theodore Roosevelt National Park. A public viewing session was created for officials, industry and local residents to see if they could see the Davis Refinery from Theodore Roosevelt National Park.
“We bought a 35-foot-long kite, that was 11-feet wide, highly visible. And we used surveyors on the site to pinpoint the location of that kite,” Hedrington said. “We flew it up to 150 feet, which is the height of the crude column, no one could see it.”
Hedrington added that spectators brought spotting scopes, binoculars and other sightseeing devices to enhance their viewing capabilities. Next, they raised the kite to 200 feet – 50 feet higher than the crude columns.
“You could barely see a speck of something in the air with binoculars. No one else could see it with their bare eye,” Hedrington said. “The Davis Refinery is not going to impact the view from Buck Hill at all. It is our belief that it is not going to affect the experience of visiting The Park.”
In addition to a number of science projects that Mr. Wizard and PT Barnum would be proud of; there were a number of public meetings and community town halls where Meridian Energy would invite policy makers, industry executives and local dignitaries to the discussion and process.
In fact, they would even participate in other state’s ESG public meetings too. In 2020, Dennis Pungitore, EVP & Chief Revenue Officer, Meridian Energy joined Bill Jerke, FUEL and former Colorado state legislator, and Tonya Van Beber, candidate for Colorado House District 48 to talk about “Regulations Gone Wild” in Weld County, Greeley, Colorado.
Click here for the Regulations Gone Wild town hall public meeting
In Belfield, one of the town hall meetings showed a presentation of the Dakota Aquifer, which is approximately 5,000 feet below the earth’s surface. According to Hedrington, the aquifer is not being used by any municipalities, ranches or private residences.
“It’s just too deep,” Hedrington said. “Meridian’s intention from the beginning has been to minimize impact on others as much as possible. They knew drawing from that aquifer wouldn’t impact local residents because no one else draws from that for potable reasons, no one tries to drink that water.”
In the old days of oil and gas, this water issue wouldn’t have made it out of most offices with one or two people being the wiser, however, in today’s climate, one has to be transparent with transparency.
In the new days of oil and gas, protesters, investigative reporters and curious meddling minds can access public records online and manufacture outrage on social media before most people take the time to look up what the word “aquifer” means. For many in today’s political polarized culture, it’s more about the feeling than the facts.
Meridian Energy understood today’s Click and Clack Climate Activists. They understand the Rage Warriors and Cancel Culture folk too. Remember they held public meetings and have been transparent since Day One.
But this next example of what Meridian Energy Group had to endure is possibly the most important one discussed in this ESG University Class Column. This next example is one that has a tangible cost and time allowance. In fact, every single executive, business owner and shareholder should understand what William Prentice had to go through (and spend) in 2017.
During their “Public Comment” period, the Meridian Energy Group received nearly 11,000 emails (10,832) about the Davis Refinery’s proposed air permit to construct during the public comment.
Here’s the breakdown:
97.5 percent were “form” comments, mostly blasted emails from computer software.
274 were “unique” comments.
193 comments were received from North Dakota.
Of the 193 from ND, 39 are in favor of the Davis Refinery.
Of all the emails received, less than ten of them raised points that were relevant to the air quality draft permit.
This is another example of the Click and Clack Climate Activists at work. I would even go a step further and call it a Copy and Paste Computer that automatically sent out nearly 11,000 emails to a state agency during the public comment period. Prentice didn’t volunteer up the specific numbers with me, but it did cost Meridian Energy time and money and I was too taken back by all the wasted time, money and resources to ask for a specific breakdown. But it was a lot.
In late 2017, early 2018, I spoke with Prentice multiple times about the pinch of regulations and legislation. As well as the double-edged sword of innovation and technology. These conversations came after an unexpected two years of regulatory legal battles only to have their science and engineering validated numerous times by the state health departments and even federal by the Environmental Protection Agency. EPA Approved and still bureaucratic battles over political posturing.
“It’s been very frustrating because we expect people to look at us and see people who are trying to do the right thing, which we are.” Prentice said. “We don’t think we credit for that enough.”
Prentice said the group had to respond to all of the emails too. Someone had to be paid to sit behind a desk and copy and paste responses to a computer so it could tell another computer something 11,000 times. No batch emails here folks, someone was paid to copy paste an identical response to an identical complaint 11,000 times. (insert Brian Bosworth OU job comparison here)
There were some legit comments, but those could easily get lost in the shuffle of 11,000 emails.
“If somebody is worried about this project, we may not think that worry is justified, but we will respond and explain why they don’t need to worry about this once they see what we are doing,” Prentice said.
He also added the “relevant” comments were handled and responded to in detail by the Meridian engineering staff.
Prentice has always invited transparency and hasn’t faulted anyone for asking the question, however, after multiple victories and validations, the oil and gas oversight organizations should take notice now.
“The latest set of court challenges, and I get lectured all the time for commenting on legal stuff, well just reading through this recent appeal there are factual statements in there that are simply not true,” Prentice said in 2017. “They have proven to be untrue for the last several iterations. It’s like people do not give us credit or learn anything from the previous proceedings.”
And unfortunately for the industry, as long as the elected officials can be controlled by fear-mongering health and safety iconoclasts, unnecessary revenue hemorrhaging may be the “new normal” for parts of the industry as the “war on oil” begins and states can now create quick “downturns by legislation”.
In the end, Meridian Energy Group and the Davis Refinery were permitted as a synthetic minor source by the North Dakota Department of Health – Air Quality (NDDoH) after an extensive 18-month review.
This Permit to Construct (PTC) issued by the NDDoH validated all of the claims Meridian had made over the past years when they undertook the challenge to “clean up” the refining industry.
Meridian commenced construction in July near Belfield, North Dakota, east of the Fryburg Rail Terminal just a month after the NDDoH issued the Permit. The Company contracted with SEH D|B out of Bismarck, ND to take on a significant portion of the project, executing grading and other site work activities that are necessary for the refinery.
Meridian is confident the Davis Refinery will become the blueprint for all refinery products that follow it. Leveraging the best available control technology (BACT), Meridian has literally set the new green technology design standard for modern oil refinery and has redefined what’s possible in applying true innovation to all phases of the process – construction, operation, emissions control, and of course, ongoing regulation and monitoring.
However, the moral of this column is that there is a New Normal in energy and it started years ago.
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Below is the raw, unedited transcript from our artificial intelligence translator.
Jason Spiess
Alright let's go to the phone line, this one with the mic that works and we'll get the level up just a little bit. There we go. Great go to the phone line, we've got Mr William Prentice on the line with us. The C. E. O. The founder of E. S. G. And Energy. That's a title I just impromptu lee did and I kind of like it uh he's with meridian energy group, he's building refineries across the United States that are progressive on a micro level that actually are the next step of innovation and
that's what we're gonna talk about today. And we reached out to him because I you know my notes are a little bit scrambled and I don't know if it was Exxon or Chevron but it was some of the one of the big big oil C. E. O. S. That came out and said there won't be another refinery built in the United States.
And I thought well I've been interviewing a Ceo for a guy out of a company for 78 years now and they're building them and they got a couple of them lined up. So uh Mr William Prentice how you doing today?
William Prentice
Excellent thank you. Hey
Jason Spiess
what's going on with this uh Ceo talking about me no more refineries being built in the United States because I thought you know you and I have 78 years worth of interviews that kind of document the fact you are building one.
William Prentice
Yeah and that was the Chevron Ceo that said that and I tend to agree that there probably will never be a large refinery again, built in the United States, there are a lot of large refineries shutting down over the past couple of years. I don't agree that there will be no new refineries in the U. S. Because Meridian is going to build a bunch of them. Um you know the fact is that it's really difficult to get a large refinery done through the federal permit process but we have designed and
are going to build small clean and very profitable refineries that are permitted under state jurisdiction. And we'll just seek out states that want a refinery to serve their local and regional consumers and that's where we'll build them.
Jason Spiess
What type of relationship. What time of response are you getting from the States? Because the first thing that I think of is the direction we're going with our food every day, We're going more and more towards the micro farmers gardens, farmers markets all the way to your backyard. So the these micro refineries that is the next step in energy because refineries, they need to be around for a while at least and they need to become cleaner and more efficient and
etcetera. So um is there a response like a correlation of that, you know how we're moving egg from, you know, the big corporate egg down to more of the farmers market type thing.
William Prentice
Well I think there's probably a pretty deep relationship there. I mean when you're when you're getting into an era where there was an extraordinary ordinary level of, let's just call it interference to be blunt about it on the part of the government into business. Government naturally targets the larger enterprises. That's why there's such a, a intense give and take right now between the biden administration and so called big oil, you know, Exxon, Chevron marathon,
etcetera. But that creates huge dis economies of scale. No, we're not talking about a micro refinery. I mean, let's say For the Davis refinery in North Dakota, it's 50,000 barrels per day and it's going to cost us a billion dollars as we build it. Um, and that's, you know, it's not exactly a mom and pop kind of a thing, but it certainly is a lot smaller than what you see Exxon or Chevron talking about when they envision expansion into any of these areas.
But yeah, I think the trend is going to be in, in the smaller types of processing, both in ag and in refining. Um, you know, just, I mean, we're, we're right now witnessing within our industry because of the the prevalence of biodiesel and ethanol and other bio derived hydrocarbon fuels.
It's been integrated into our design. You know, we're going to be using 2000 barrels per day of vegetable oil at Davis, which provides further in state markets for and processing of ag products as well as for bacon crudo, it's because of the size of our facility, we can do that.
Jason Spiess
Let's take a second and just let the audience know which refineries we're talking about here with the names. So when we're talking about the Davis refinery, which one is that?
William Prentice
Okay? Davis refinery is the one we've been working on for eight years. Actually, it's located west of Belfield and just east of the Freiburg crude by rail terminal, uh just right south of the interstate. Um that is a 50,000 barrel per day refinery, actually 49,500 barrels per day. And it's going to produce gasoline and diesel fuel and some butane and propane and so forth the projects.
It's, you know, as I mentioned, been uh going since 2014, we began permitting in 2015 Better permits as of June 2018 with the air quality permit from d. q. Um We promptly got sued and spent several years in litigation on various permits? All of that was finished late 2020 just in time for COVID. And during the process, we've continued to work on it and under a contract executed almost exactly a year ago, we began the detailed design and procurement and the construction of the Davis
refinery. Um where is it going to be some site work going on this summer? We gotta de water the site now and then next year, next May we'll start working on the rail facilities and doing founded. So, you know, again, it's a, it's a new refinery permitted under state jurisdiction and law and it's the basis of our other planned refineries in texas and Oklahoma.
Jason Spiess
Have you been, has the state been giving you any economic money or anything like that? I've been, I I saw that the, oh that refinery in Dickinson that's changed hands a couple of times and every I I still remember that red carpet, literal red carpet ceremony where they did actually bring out the red carpet. But I had never seen so many dignitaries and everything for this refinery outside of Dickinson.
And then I saw just last week they got another $340 million. So the state really seems to be invested in that refinery outside of Dickinson, have you been given any support from the state? That would even be 10%, 100% 200%. Um you understand my question by that?
William Prentice
Yeah, and I, and I appreciate the question. I I apologize to uh you know, the state of North Dakota and my shareholders that I do not know how to do that. I do not know how to seek government aid to build a, you know, pure free market facility for a development stage company that wants to be an agent of change in this business. Um I think the market should be the basis for what we're trying to do. And it's not our policy to ask for anything from the government for instance, you know, we've
not requested any tax relief or anything, we're going to pay our taxes, you know, Davis is gonna triple the budget for Billings County and add about 1200 to 1400 jobs scenario. That's what business is supposed to do. I just, I apologize to everybody. I don't really know how to go about getting $300 million dollars from somebody in the state or the federal government. It's
Jason Spiess
interesting you say that because I was just having this conversation this morning about the industrial forest because I feel like a failure because I put together a plan where we had the city of bismarck on board and we had a sustainable solution and we had a track record and everything else and we lost out to the same old nonprofits that ended up killing the trees anyways. And
William Prentice
so
Jason Spiess
we were just talking about how, how it, it is, it seems like there there has become a very government controlled marketplace when it comes to dollars and cents. And when I grew up, when I was growing up, people in the government were there because they couldn't hack it out in the professional private sector. And now, since the government has really gotten into business for a lot of different ways when they fail, they get bigger and this is a very difficult, interesting time we're
at and that's a whole different, I don't need to get into that too much because I've been, I've been going on that and I don't want to get you involved in that political stuff because this is supposed to be a non political, uh, platform and program. However, what I'm gonna site next is another example of what I'm talking about, which is Senator Cramer has been going on all these talk shows, uh, ludlow Kodro, I think you name it. I mean anything on a 24 hour news network he's been on and
he's supposed to represent the state and the businesses of the state. And I've never heard him talk about your refinery one time. Has he ever ever talked about it? I've heard him talk about shutting the refineries down, agreeing with the Chevron guy. So I, you know, sorry to put you in the crossfires with Senator Cramer. But he's been kind of making me perk up a little bit over the past year with uh, some of the things he's been saying and doing so. Would you care to comment on that?
William Prentice
Well, you know, I don't wanna say anything that would upset Senator Cramer people on his staff. But you know, there we are in fact doing a lot of good for the state of North Dakota. And when somebody's out there talking about the refinery industry, I think it was an opportunity that maybe give us at least a honorable mention that would have assisted, you know, in our public profile.
But then again, you know, I can't say that that would have been nice when I also say that we steadily ignored government, try to do things on our own with our head down and not depend on government for, for anything except for them to do their job as far as um, evaluating and awarding permits is concerned. We did because of the fact that Senator Kramer and you know, others from the North Dakota political landscape have not been very vocal in their support, a number of our shareholders
and I think about a third of our shareholders actually from North Dakota got very upset with me for not saying something. So I did, you know, send Senator Cramer a letter just updating him on our process and where we are in the project. And just as a reminder because, you know, in the past we've met with Senator Cramer and Senator Hoban and you know, uh, Mr Armstrong and just to keep them up to date and you know, not that we've ever asked for anything, but it's polite to let them know what
we're doing. But again, you know, I'm not in the business of asking government for anything. But it would be nice to be remembered when, at a time of such dire urgency in the industry where we are with a shovel ready project that we're actually in construction on and uh, it'd be nice to be noticed and given some credit for being there with a solution. Well,
Jason Spiess
let's talk about the solution because that's really what we try to do with the crude life first of all is find experts that are solving problems out in the marketplace and you've been doing it. I've talked to your, you know, your engineers, zia, engineering and dan of the project manager, I've talked to the people out in Belfield, I've talked to the local county commissioners, you name it.
I mean, it's, it's, it's like I said, it's been well documented. So let's educate these people about the Davis model and what's enabled meridian to really do what you're doing and say that, hey, the impossible word is not something that we should be saying in today's, uh, you know, economic and political and environmental climate. Let's educate them a little bit
William Prentice
Well, thank you. And I, you know, I do love to brag about what we've done. So I do appreciate that. Open. Um, but you know, when we, when we started this project, we're not, we're not a big oil company. Um, you know, we started from scratch, which in the energy industry means we're able to cheat because we could start with a blank sheet of paper and do things the way we considered right.
And so at that time were also looking forward to a election in 2016 that had the possibility of giving rise to a administration that was not very friendly to, to crude oil, you know, based businesses, you know, little that we know what we'd end up with later. but as a result of that, we decided to focus on the refinery that incorporated everything it was now available as far as technology is concerned and incorporated into a smaller refinery, but although it meets all the federal
requirements for ignitions is actually permitted under state jurisdiction, giving us the ability to go to other states, as I mentioned before. Um you know, as you also know from our past discussions, of course, uh the perfect location for the Davis refinery happened, the too close for comfort for many people to the Tr National Park. So put even more pressure on us to make sure that we were very clean as far as air emissions are concerned, for instance.
But that turned out to be a good thing because the project that we've designed for, Davis Has 1/8 of the industry average, the US refining industry average for total emissions and for greenhouse gas, it's less than 40% of US average. You know, if we got credit for that, the carbon credits just on that reduction from other refineries, carbon emissions would be enormously valuable.
There's just no way to monetize those in us today. Um but it did give us a way to build a cookie cutter and we are going to be able to put this in other locations and every time we do that we're we're going to be the cost leader in those areas. So we'll force essentially other refineries either foreign or domestic to back off. Um, and it'll be cleaner.
It'll regency missions in the United States and it will also create more competition for the consumer at the pump and competition as we've seen is a way to control pricing. Um, you know, I should say a word on behalf of Big oil and I'm often openly critical of the big guys that are out there in our business. But you know, they've had a horrible job trying to figure out what to do.
Uh, you know, first of all over the last 40 years in terms of meeting demand and trying to cope with with environmental concerns at the scale. That makes sense to them to make the investment. But most recently you can imagine being Chevron or Exxon right now and having the administration beating on you like a drum To expand capacity when you're already operating like 94, which is not good for the industry. There's gonna be safety and maintenance concerns emerging if we keep that
up And it takes, it would take 10 years even if Exxon or Chevron could build a brand new refineries in the us because that's what it would take to get us through the federal permit process. I feel really bad for those guys and You know, but my job is to, is to continue on the road that we've charted out and build these smaller plants and do what we can over the next 10 years to build, you know, five or six of these refineries out there and help take up the slack on industry demand. ...
Jason Spiess
Yeah. I tell you what I'm looking at, what's happening right now is I kind of saw this happen in the newspaper industry when they wouldn't let go of the printer when the printing press, the printing press control their industry for 20 years too long and it bankrupted a lot of newspapers because they wouldn't adapt and they wouldn't get rid of the old ways.
And that's what I think the sunk cost in the industry is right now. Is that there's, there's some whether it's cronyism or nepotism or good old boy network or whatever you wanna call it. I think that's the biggest sunk cost right now because they won't change. They don't want to change. They don't see what's happening on the outside world and it's creating a world to wear politicians and lawyers are changing science and that's a dangerous world when politicians and attorneys can
change science, but that that's deemed too political. And I think that's more fact than political. But anyway, so, um, I don't know if you want to comment on that hot potato.
William Prentice
Okay.
Jason Spiess
Good deal. Okay. So let's, I do want to ask you though about, about the, the actual science behind your facility. You said you learn some things the short and long term advantages. What are they then I mean? Because that's science, What are the short term, uh, impacts that are positive, negative in the long term ones.
William Prentice
Well, let me just, uh, if you talk to anyone of the the people that are running a major now speak refinery. Um, you know, it's when I look back at what I know about the way things are done and In the industry that goes back 100 years and the differences that we've incorporated into our design, it seems like a nightmare to me. You know, you're sitting on the coast, you're trying to figure out how to maximize your production.
You're trying to figure out how to minimize your cost of crude. Uh, so you're making deals, you know, month and month out with various parties for the crude oil that comes in. You have a plant that's very complex and different parts of it are operated at different levels, depending on how you put that crew together. There are constant system upset.
It's very hard to control. Uh, you know, one of the things that's most notable about a traditional refinery is the flare stack and you can sort of tell how they're doing and any given day by how big that plane is. And you know, when you're cycling between different blends of crude oil and different product mixes for instance, in California Depending upon the location and the time of year.
There are over 50 different categories of gasoline and and blends that you must come up with to serve those markets. It's a nightmare. Um so I feel bad for those guys and you know, when I compare it to our job again, we cheated, started with a blank sheet of paper, started with bacon oil, which except for maybe Saudi life, probably the easiest oil to refine in the industry.
And you build a nice tight, compact, efficient design that is only going to use that crude oil and you know, none of this mixing and matching or anything like that and the ability to put together something that's very clean and efficient and as a low operating costs because of that efficiency, it's just so refreshing to me as an engineer that I honestly get very excited about being able to get David started up and and showing how this should be done.
Um, and you know, we're gonna take that that same approach as I mentioned before to the other shale basins in the United States and help those areas have a competitive source of refined products as well.
Jason Spiess
So, when, when you go to these other shale basins, um, I know that the Winkler Walton Kermit, I think Kermit's the city Walton is the name of the refinery and Winkler is the name of the county. ...
William Prentice
Okay, so
Jason Spiess
let's uh, yeah, when, when you go there and then I heard you talk about Oklahoma in a previous interview too. So I'll let you talk about those in a second when we we, you go in and talk to the officials or whoever you need to talk to obviously the Davis refinery comes up as, as your proof of concept. Now the fact that you got permitted because you are permitted and you are next to that theater Roosevelt national Park, is that does that help or hurt or does that do you bring that up or you know,
talk to me a little bit how you navigate through that? Because what you've done is absolutely amazing, but somebody just might not agree with it because all of a sudden, you know, they're, they're green washed or climate change, whatever the case is. So I imagine you even got to be a little bit, you know, tiptoeing about certain, certain things that you kind of read the room a little bit. Is that fair question?
William Prentice
Yeah, it's, it's a fair question. And I, and I think that particularly in texas west texas, a a growing awareness that there has to be some further in state processing crude. I mean, you know, the site you mentioned, we had to um, we had to put that off because uh, we, we weren't certain that the family that was going to be hosting that facility was 100% behind it.
So we're actually looking at a different site right now that, you know, there were probably five locations in west texas that we're looking at right now, one of them will be our our next refinery site but the others will eventually host a facility like Davis and the fact that we have permanent this facility in North Dakota. The fact that the E.
P. A for instance was consulted by um by the state authorities and I believe also the county in North Dakota before permits were awarded means that we've really gone through the gauntlet already. Um You know, we also um in order to access institutional funding for our projects, we had to go through a very rigorous E. S. G. Review with our investment bankers and passed that with flying colors too. So we have a lot of we have a lot going for us when it comes to introducing this concept
into a new area. Um And yeah it's been extremely helpful and quite frankly, looking back ungrateful for the the intensity of the permitting efforts that the state and the county put us through because the body of knowledge that we have now and the intellectual property developed to be able to cope with that is extremely valuable. And it does make a big difference when we move into a new area.
Jason Spiess
Are you getting into the E. S. G. Business now? Since you're I mean you've got to be one of the experts. I mean you've done a couple of E. S. G. Reports and where where where where you at with the E. S. G. World? I mean like I said to my opinion, you're you're one of the experts so
William Prentice
well, you know it's kind of funny Jason because when I first heard that acronym, Yes she I wonder what the hell is this now? And I realized um You know that was baked into Davis from Day one. The company was founded by some North Dakota Expatriots that they couldn't find jobs when they got out of high school with college. So they went all you know to Portland and California and so forth.
They wanted to create jobs so that there would be that many fewer of those conversations around the breakfast table when the kids couldn't find a place to work. So um that's what they wanted to do is the social part of it, the S. And the E. S. G. Was the foundation principle of the company. Um you know we we have made that part of our corporate strategy from day one even before the S.
D. Was kind of a known terminology out there. So you know I mean obviously we were going to be able to score very highly on that, especially on the east. You know if you look at it incrementally every barrel of oil that we process in the refined products, We get rid of 7/8 of the emission that would have otherwise gone into the air in the United States. It's even greater than that if we're offsetting refined products that are imported from some other country.
So you know it's it's doing a lot for the nation. Um and you know the country has done a lot as far as the carbonized over the last 30 years. So we agree with that as a need in our marketplace, whether it's being driven by government, you know actions or not, the market wants to see us industry utilized was carbon. So that's what's been happening for a long time. Um And we're glad to be a part of that. Um But yeah E. S. G. Is in our blood now ...
Jason Spiess
Energy Secretary terry um Graham, she's Grand home. Grand home is how you phonetically say her name. I don't know how to pronounce it.
William Prentice
Uh
Jason Spiess
That's what I thought. Yeah I always think Graham and Graham um I get it kind of confused. So i in my head my my phonetics, radio uh news. I just say grand home, that's why I always say josh Duhamel. He gets so mad when I call him that um it's how it goes. Some days uh she's meeting with these refinery executives this week next week something like that. Uh Any thoughts on on something like that. ...
William Prentice
But you know I mean that's a that's a media event that has nothing to do with us. Um The government likes the fact that there are some big refineries out there, big Refiners out there that they can deal with, you know in a in the in the small conference room, so to speak. You know, biden's leather went up to seven of C. E. O. S. And that's fine. That's Big Oil.
The government feels comfortable dealing with the major firms in these industries. Um, don't expect any solutions. Uh after that meeting the biden administration will be able to point to those Refiners and say they wouldn't help and oil is bad and Big Oil will leave that meeting and be able to posture themselves position themselves properly as far as defensive lobbying is concerned for the next couple of years and their objective is to utilize the refinery emergency is a way
to loosen regulatory controls that might allow them to let's say expand existing refineries little bit quicker. So you know, that's what's going to happen. It has nothing to do with us.
Jason Spiess
It uh what what you were just talking about reminded me of what soured me on the process when I tried to get involved in my twenties into either. Not even politics. Just the process was it was very apparent what a dog and pony show was. I always heard that term. But when I saw it before, my own eyes, what a dog and pony show was.
Oh boy. And is that is that what you think's happening where they're just gonna both? You know, the biden administration is just kind of fate accompli they've already decided what they're gonna do, they're they're having this meeting no matter what happens, they're still gonna move ahead no matter what.
William Prentice
Well I mean, yeah, their position is unchanged? Uh, it's a very unfortunate set of circumstances for both parties. You know, big oil has been expecting to be cracked down on and they have industrial policy in us, uh, create incentives to move away from fossil fuels and other areas. And they've been, You know, making steps in that direction without really knowing, you know, where it's going to lead over the next 10-20 years.
There's a lot of uncertainty because, you know, they just don't know yet whether their responses to these industry pressures are going to be productive and leave them still in a position of market prominence and government, you know, they, by administration came in thinking, okay, it's now time to, uh, try to push people out of, um, you know, fossil fuel derived transport fuels and into electric vehicles and other more benign, environmentally benign modes of transport.
But, you know, partially as a result of covid and the resulting monetary and fiscal policy that, um, you know, the federal government felt compelled to to put into place, we have inflation and price increases that happen way too fast for any of the gradualism that, uh, I thought would take, you know, take the stage here for the energy transition.
Instead, it all happened too quickly. So it turns out that, yes, uh, the fact that we've lost a million barrels per day of refining capacity in the United States hurts. In fact, that we have inflation hurts and it's amplified in the energy sector. So what do we do about that? Well, a complete free market society, when these forces began to appear, you would have seen a little bit more energetic investment into the refining sector.
But you know, the administration can't Yell at Exxon to tell them to increase capacity when they're already operating at almost 98%,, uh, to do that, To respond to build more capacity would require certainty of the recovery of your investment. And the next day you'll hear the biden administration talking about how we're going to get rid of the oil industry.
I think, you know, the recent episode, somebody sent me a Youtube clip of for the the Fox correspondent asked our current Press Secretary of whether or not the oil industry was going to be allowed to have some certainty under which it could make the investments to correct this refined product shortage. And She essentially ended up her answer by saying, Well, we're not gonna need any of that stuff in 4-5 years.
So maybe not. Um, you know, when, when you have that kind of statement combined with biden's letter to the oil industry executives in any other nation that would have been considered kind of a run up to a nationalization type battle. Um, you know, those are the kinds of communications from the government that preceded, for instance, the takeover, the energy assets of various firms down in Venezuela of energy executives don't ignore those things.
Energy investors are concerned when they hear those things. So it's very counterproductive that they really want a response in the industry to these shortages. But yeah, I mean, the fact that energy is so expensive and you hear a certain democratic politicians bragging about having acquired electric vehicles and they don't care about gas prices. Now, it's just, uh, it's an irresponsible approach to the energy transition
Jason Spiess
coming out. And I'm in Gillette right now, Wyoming. And as I was driving into town, first time, I've been coming out here for five years and the first time I saw this was rail cars filled with coal as far as the eye can see. I mean, it's like a stockyard of cattle except for cars of coal. And I thought, wow, this is, I gotta get a picture of this when I leave town because I've never seen anything like that.
And I thought, well, I guess that's our energy reserve for the summer for air conditioning. I just, I, I, I've seen what they're doing with coal and the difference between like coal and, and fossil fuels is quite considerable. Um, you know, the Davis refinery, aren't you guys doing jet fuel and stuff.
William Prentice
Um, no, we're putting all of that part of our into Okay,
Jason Spiess
Diesel. Okay, so Diesel, that, that's not why I was gonna go diesel next. But I thought the jet fuel is part of it. So I apologize. But the diesel part, um, that's for farmers. That's huge in North Dakota. Just the fact of saving the transportation of getting the diesel too. That's the part I don't, I don't get is that there's, There's no way we can go off of a fossil-fuel society within
the next 30-50 years. It's just not even feasible. And, and to have any leadership, even try to talk themselves out of it is, is very irresponsible. It is anyway, so I just,
William Prentice
you're right. I mean, we will be doing, uh, jet fuel out of our, our texas and Oklahoma project. You know, it just, there is more of a demand that is unmet right now in the region around North Dakota for diesel, including arctic people. So we're going to focus on that. And uh, it will change the dynamics of the fuel markets in those areas.
You know, we're also gonna be producing butane and propane in the area in the past, has seen shortages of those products as well. So we're gonna provide an in state processing capability for all of
Jason Spiess
that.
William Prentice
But yeah, the fact that you're seeing Coltrane's again, is interesting. Um, you know, you know, there's been a lot that's happened in the area of coal processing that can make that a much more benign cleaner energy resources Well, but it's so, you know, people are not very welcoming.
Jason Spiess
I just, I've very rarely have I seen leaders throw the baby out with the bathwater. I mean, I get that sometimes you gotta reset even, you know, God, in the in the old testament did the flood That was the throw the baby out with the bathwater? And they just seem to do it every couple of years, every couple of years.
It's like, nope, we're going to polarize this way and we're going to polarize this way. And people are craving purple. They don't want this extreme blue or this extreme red anymore. They just want something purple and they'll take the Vikings. Might be the most popular football team this year. Right?
William Prentice
B
Jason Spiess
anyhoo what kind of what kind of summary wrap up should we do here? What what what should you people walk away from this interview knowing or what do you want people to know walking away from this?
William Prentice
Well, I don't know, there's been a lot in the news about refining. Uh just very political. Now, you mentioned the meeting in Washington. I don't think much is gonna happen as a result of that that would impact everybody's daily life. Um You know, for the last eight years we've had our head down doing our job and we're gonna build Davis. It's in construction now. Uh you know, it's a heavily module arised project.
So you're not gonna see a lot of dirt flying in the air until next year, but it's still being done. Uh You know, we just kind of look at this all this activity and publicity surrounding the industry and shrug our shoulders. We're gonna keep doing our job and go forth and build refineries. That's what we're here for.
The Crude Life Podcast: Here Comes The Cleanest Refinery On The Planet