Refinery Construction Begins on North Dakota Reservation

Photo: Oil refinery in Billings, Montana, by Jon Martin via Flickr

By Reese Rogers

We are of the firm belief we will become more sovereign by the barrel.”

–Chairman Tex Hall. January 2011.

Construction began recently on the first oil refineries to be built in the United States in decades. The refinery is situated on the Fort Berthold Reservation in North Dakota, home to the Mandan, Hidatsa, and Arikara Nation. The construction is the culmination of a development process that began back in 2003 when tribal leaders of the Three Affiliated Tribes first proposed the refinery project as a way of bringing economic development and jobs to the reservation community. Fort Berthold now encompasses much of the booming Bakken oil field.

This recent energy boom on the reservation and now the permission to build the refinery are long-awaited bright spots in the economic development of a people who have seen more than their fair share of hardship. Beyond the history of decimation through disease and violent conflict, many tribe members today still remember the tribe’s 1951 relocation to make way for the Garrison Dam on the Missouri River. Their original settlements and childhood homes are now buried under the waters of Lake Sakakawea. 

It is a source of some pride now that the new refinery is to be owned and operated by the Three Affiliated Tribes, providing jobs for tribe members and much needed income for the reservation. The 13,000-barrel per day refinery will process oil produced in the surrounding Bakken fields. The rapid development of the Bakken  has already brought jobs and income to many of the reservation residents. Unemployment, which hovered around 40 percent before the boom, made a stunning drop to 4.4 percent in 2010 as tribe members found jobs on rigs, as truck drivers, and in support industries for energy companies. The refinery itself is supposed to create 1,000  jobs during the two-year construction process and 65 permanent jobs once it is fully operational. These permanent jobs, and the boost to local service industries, are crucial in energy boom areas where jobs can disappear as quickly as they first appeared when wells run dry and energy companies move on to more lucrative fields.

Refinery proponents breathed a sigh of relief after waiting two full years after the EPA had issued its Final Environmental Impact Statement (FEIS) for final approval of the project. Two hurdles delayed the construction until present. The FEIS, which was completed in August 2009, determined that the project would require a wastewater permit for discharge into a nearby tributary, but would not significantly affect air quality or surrounding wildlife populations. Yet, once the FEIS was opened for comments from the community, concerns about the lack of air quality permits and threats of litigation caused the EPA to withhold its final issuance of the necessary permits.

Additionally, in early 2010, the tribe decided to switch the refinery feedstock to Bakken crude. The refinery proposed in 2003 was originally slated to process Canadian tar sands crude oil. As late as 2006, not a single well had been drilled in the Bakken formation on the reservation. There are now over 150 wells operating on the reservation with almost ten times that number expected to be drilled before the Bakken boom ends. This rapid development convinced the tribe to switch the refinery feedstock from Canadian crude to the locally produced Bakken crude. While both feedstocks are light, sweet crude (industry terms meaning the oil flows easily and has a low sulfur content, both desirable traits), the EPA felt that it would be necessary to do additional impact assessment given the change.

Despite the delay, the EPA finally ruled that the change in feedstock would not significantly alter the impacts of the project. While construction has begun on the refinery, there are still a few items to be completed before the refinery will be fully operational. Beyond a handful of minor permits that will most likely be issued, the refinery management must still negotiate a commitment from Enbridge Pipeline to build a connecting pipe from the refinery to the main line. Additionally, the Department of Interior is preparing a separate ruling to decide if the lands on which the refinery is to be built should be placed in trust. Trust lands are lands owned by the tribes, but managed by the federal government. The DOI is hesitant to place the refinery lands in trust, as this would require the federal government to assume responsibility for any damage to the land from spills or other accidents.

Although construction on the refinery has begun, tribal members were not unanimous in their support the project. Many residents are concerned about the environmental and cultural impacts, as well as health implications for surrounding communities. While the EPA has determined that the air quality and wildlife will be minimally affected, there are still concerns over pollutants and the treated wastewater that will be discharged into a nearby stream.

These debates between the economic benefits of energy production and its effects on environmental, health, and cultural aspects of reservation life are not limited to the refinery. They have accompanied the boom from the start. The unique situation of the sovereignty of the tribal lands often leads to red tape and confusion over responsibility when it comes to environmental regulations. While the EPA took control in assessing the environmental impact of the refinery project, residents have expressed concerns over the lack of environmental regulations governing other actions, such as dumping. Other concerns have been voiced about development encroaching on cultural sites.

However, with more and more wells being drilled in the Bakken field, the refinery project is a go.  The proposal in 2003, filed before the boom really started in North Dakota, now seems almost prescient as the Bakken continues to rapidly develop. It may also be just what the reservation needs to provide itself with a stable, lucrative industry that creates jobs and steady income for reservation residents. The refinery is expected to be completed in 2013. 

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Last modified Wed, 28 Sep, 2011 at 10:58