Posted on March 3, 2019
“If the full-slate Meridian refinery project is built to produce 60,000 barrels per day of finished refined products, then Meridian will be the Midland region’s best option to lower local pump prices that have are on average the highest in Texas and above national averages,” said Greg Haas, Houston-based director of integrated oil and gas with Stratas Advisors, a global energy consultancy and forecasting firm.
“More refined fuel supply should definitely help lower refined fuel prices in the Permian region,” he said in an email. “Meridian’s plans take advantage of regionally discounted crude and regionally elevated premium fuel prices. There’s no reason other than low regional refinery capacity as to why the Permian region, the capital of the unconventional oil revolution, should suffer simultaneous locally discounted crude prices and locally higher fuel prices than other regions with neither crude production or refining capacity, such as the State Capital of Austin or the Nation’s capital in Washington D.C.”
Producers active in the Permian Basin, such as Parsley Energy Operations, are offering their support for any initiative that enhances the infrastructure needed to move Permian crude to market.
William Prentice, Meridian chairman and CEO, told the Reporter-Telegram by email that the Meridian Pecos Refinery is being engineered as a full-conversion refinery with a full slate of refined products, predominantly gasoline and ultra-low sulfur diesel fuel.
“The local markets will have a reliable source of high-quality and cost-effective refined products to work with,” he said.
The site that has been secured by Meridian can accommodate up to four such facilities side-by-side, he said.
“Meridian will simply initiate permitting and design as the market response indicates that it should do so.”
He said the refinery will likely take less than a year to permit and approximately two years to build and commission, conservatively estimating it will begin full commercial operations three years from now, “although it could be less.” Its fuel oil products will be compliant with the International Maritime Organization’s clean fuel requirements that take effect in 2020.
The refinery will create up to 100 new direct-hire jobs. Prentice cited job creation studies by the state of Washington for refineries in Anacortes that show a job multiplier effect of up to 12:1.
“If the same held true in Winkler County, this means there will be total job creation, including indirect and induced jobs, of up to 1,200 new jobs for the local community. The benefits to the local community will also include tax benefits from the refinery itself and from those employed there,” he said.
In announcing the refinery, part of an agreement with a Winkler Company subsidiary, Prentice said Meridian believes crude supply and strong demand from the refined products market indicate the Permian Basin was the next place for Meridian to locate a crude refinery.
It will be the company’s second, following the Davis Refinery under construction in Billings County, North Dakota. The Davis Refinery is a full-conversion greenfield refinery permitted for air quality purposes as a synthetic minor source, demonstrating substantially lower emissions on a per-barrel basis than the industry average. The Permian refinery will also be permitted as a synthetic minor source, meaning it will voluntarily accept enforceable limits to keep emissions below major source thresholds.
Prentice said is his email that “by designing the facility to meet the threshold emissions levels that define Synthetic Minor Source means it can be issued a permit to construct by a state’s air quality lead agency pursuant to that state’s State Implementation Plan with the Environmental Protection Agency rather than going through the EPA itself for an air quality permit.
“This saves substantial time obtaining the Permit to Construct and commence operations while ensuring very low emissions and less impact to the environment,” he said.
Indeca Crude Express, a sister company to the Winkler companies and regional crude hauler, will be tapped to facilitate the gathering of trucked barrels of oil as well as distribute product to market.