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What Will New Refinery Mean?

BOOMTOWN

Courtesy of Odessa American

One of the first oil refineries to be built in the U.S. in several decades will be making its home in Kermit, and the hope is that its presence will bring down gas prices and help bring more jobs and housing to a crowded region. The $1 billion refinery will make gasoline and diesel, and is being built by the Meridian Energy Group, who are also in the process of building an oil refinery in Belfield, N.D.

With the new refinery also comes new jobs — about 100 permanent jobs, Meridian Energy CEO Bill Prentice said via phone. One hiccup that could be caused by that is the lack of housing currently in Kermit. Jerry Phillips, mayor of Kermit, said the city recently sold a piece of property to Midland-based Whitetail Contractors, which plans to build condos, town homes and some single-family dwellings in Kermit.

“Housing is an issue that we’re continuing to work on, we’re kind of landlocked by the big ranchers in the area,” Phillips said.

Duff Michel, a Kermit resident and owner of Michel Real Estate, said there isn’t enough housing to support the refinery right now. “We’re overrun with RV parks and RVs, and they just built a big RV park outside the city here that’s got 300 or so spots and they’re filling up as fast as they can get some electricity turned on,” Michel said.

But, Michel said he thought the refinery would still be a good idea in the long run.
“Anything that will bring permanent jobs might bring permanent housing,” Michel said. “There are a lot of people still that would like to live here instead of driving in.” Prentice said they would also like to look locally for their hires, which they are doing now in North Dakota.

“I’d much rather train somebody locally that has the right work ethic and we can teach them what they need to know rather than have a bunch of guys coming in,” Prentice said. “We just want guys that want to be there forever.”
The land they bought was on private property, so they didn’t go through any governing entities and aren’t receiving any tax incentives, but Winkler County Judge Charles Wolf said he talked with Prentice, who asked him how the community would receive the refinery. Wolf said he thinks the refinery would be received positively.

“You’re always going to have some opposition, but maybe gasoline prices and diesel will go down,” Wolf said. “That would benefit all of us.” Chris Martinez, president of the Kermit Chamber of Commerce, similarly said she was excited at the prospect of the refinery. “Anytime that you’re going to bring more jobs to our community, you better believe I’m excited,” Martinez said.

Meridian Energy Group began construction on their North Dakota refinery back in July, and in August started looking for the location of their next refinery. “We started to have some guys roam around and just decided we wanted to be close to the Delaware [Basin] and started talking to folks and picked that one site,” Prentice said. “It’s just central to everything and a lot of pipelines going through there. For a refinery, it’s just about ideal.”

The refinery will specifically be located near Highway 18 and FM 874, north of Kermit in Winkler County, and is conveniently located near the railroad. Prentice said it will take about a year to complete the permitting process, and a couple years for construction, so Prentice said they are looking at an opening time of about 36 to 38 months. Once it is open, the refinery will produce 58,000 barrels a day of gasoline and diesel total, and has the capability of producing other fuels, such as jet fuel. Prentice added that the gasoline they produce will definitely hit the local market, which means gas prices could go down.
“That’s something that kind of upsets people already in the business,” Prentice said about falling gas prices. “When we were putting our plant up in North Dakota, I had to remind everybody that the oil industry is supposed to be a competitive industry, and that’s what it’s all about. We’re going to reduce the price of gas and diesel, that’s what we want to do.”

This will be only the second refinery in the Permian Basin, the other being in Big Spring. Prentice said their two plants are the first to be built since the ‘70s, due to the oil industry growing worried about permitting and agencies like the Environmental Protection Agency.

“It kind of makes it hard on bigger refineries when they try to do something new, so I think they’d rather just do modifications and upgrades with existing plant sites to try to work within their existing permits whenever they can,” Prentice said. “The downside of that is you don’t really get an opportunity to make use of the latest technology in its entirety.” This refinery, and the one in North Dakota, will be designed to meet the EPA’s threshold requirements for air emissions, Prentice said, at about a 10th of the level of emissions the average refinery produces today.

 

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