Terry O’Clair, Director of the Division of Air Quality, North Dakota Department of Health on Permit to Construct for the Davis Refinery:

“The Davis Refinery permit application was subjected to an extensive review by the NDDoH. Emissions from the facility are expected to comply with all applicable federal and state air quality regulations”

Davis Refinery Permitting Overview

  • Rezoning and Conditional Use Permits granted by Billings County in July 2016
  •  Water Appropriation Permit to State Engineer – Recommended Decision Approval on July 6th – Final approval expected November 2018
  •  Permit to Construct (Air) – From ND Department of Health – Permit Issued June 13th 2018
  • Permit to Operate (Air) to be filed upon completion of initial phase of Davis
  • Industrial Storm Water Discharge Permit – to be submitted in late summer/early fall 2017

Siting and Permitting

The issue of siting of the Davis Refinery was resolved by the Billings County Board of Commissioners on July 6th, 2016 when they approved Meridian’s Rezoning and Conditional Use Permit application. Meridian’s application for Rezoning and for a Conditional Use Permit (“CUP”) was submitted to Billings County early in 2016, and the Billings County Zoning and Planning Board unanimously recommended that the CUP be granted. On July 6th, 2016, the full Billings County Board of Commissioners approved the Company’s CUP application by a unanimous vote. The community supports this location, and the logistics of crude supply and product sales support this location. As required under the CUP, Meridian is making it certain the Davis Refinery design meets all other permitting requirements, including those relating to obtaining the PTC as a Minor Source.

Note that a major concern of officials from the local Theodore Roosevelt National Park (the “Park”) was that Davis would impinge on the Park view shed. Through both engineering line-of-sight analysis and a demonstration involving large kites precisely located by surveyors, Meridian proved that Davis will not be visible from the Park, even from the highest elevation within the Park – Buck Hill. Through the use of air coolers instead of cooling towers the potential for visual impact from cooling tower condensation has been substantially eliminated, and a large agricultural and natural buffer around the Refinery will limit its visual impact from local communities and highways.

The other major permit to be obtained prior to field construction is the Permit to Construct (“PTC”) to be granted by the Air Quality Division of the North Dakota Department of Health (“NDDoH”). The PTC application was submitted to NDDoH by Meridian on October 17th, 2016, and an amendment to the application was submitted on April 5th, 2017, which documentation demonstrates that the Davis Refinery qualifies as a Synthetic Minor Source. On December 6th, 2017, the NDDoH issued its draft of the PTC for Davis, beginning a 45-day public comment period that will end on January 26th, 2018, and Company believes that the final PTC will be issued shortly thereafter.

 

Design Impact of Air Quality Control Measures

The founders, investors and management team of Meridian have made it a principal objective of the Company that the Davis Refinery, when completed, will be the cleanest such full-conversion crude oil refinery on the planet, and the Davis Refinery has been conceptualized and designed accordingly. At a rated capacity of up to 49,500 barrels per day (“bpd”), Davis could produce as much as 800mm gallons per year of refined products from local crude to serve regional markets. However, the Air Quality Division of the North Dakota Health Department (“NDDoH”) instructed Meridian to submit its application for the air quality permit to construct (“PTC”) for the full potential capacity of the Refinery. Meridian has done so, and the draft PTC posted by NDDoH shows that Davis would qualify as a Minor Source at capacities of as high as 55,000 bpd. A facility of the size of the Full Refinery would normally apply as a Major Source, but by utilizing the latest in hydrocarbon processing technology and instrumentation and controls systems, the Company has demonstrated that Davis qualifies as a Synthetic Minor Source! The specific measures that have been incorporated in the design of Davis Light and Davis Full to achieve this milestone are set forth in the PTC Permit Application.

 

Design Impact of Water Supply and Wastewater Discharge Control Measures

The Davis Refinery will be the cleanest such facility ever built in terms of water as well as air quality! The Davis Refinery site is in an area that experiences less than 20 inches of rainfall annually, so availability of potable water is something that must be dealt with creatively by Meridian, not only in the context of arranging water supply, but in arranging the various water supply, treatment and discharge permits administered by various state and local agencies.

PSC Siting Certificate

North Dakota regulatory law requires that any oil refining or processing facility that is capable of processing greater than 50,000 bpd must obtain a Siting Certificate from the North Dakota Public Service Commission (“PSC”) before it can be constructed. To ensure that Meridian is in compliance with North Dakota laws and regulations, Meridian has restricted the design capacity of the Davis Refinery to 49,500 bpd. Decisions on any potential future expansion of the Davis Refinery will be made after Davis is in operation, and would not proceed unless and until Meridian has received a Siting Certificate from the PSC. On December 19th, 2017, officials from Meridian met with the full PSC to make sure that the PSC was fully informed of the status of Davis and the intent of the Company in connection with potential future expansion of the Davis Refinery. Meridian intends to remain in regular contact with the PSC to avoid confusion on issues relating to phasing and throughput capacity.

The Environment

“Meridian Energy Group, Inc. is committed to building the cleanest refinery in the world, and has engineered Davis Refinery to the highest environmental standards, including the ability to meet the very strict Class 1 emissions standards which qualifies its proximity to Theodore Roosevelt National Park. Meridian has taken extensive measures to ensure that the Davis Refinery will not negatively impact the natural landscape of the surrounding terrain both during the day and at night, and has conclusively demonstrated that the Refinery will not be seen from the National Park.”