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Dakota Prairie Refinery Progressing, Construction Well Underway

Stock quotes in this article: MDU

MDU Resources announced today that construction of the Dakota Prairie Refinery project is on track with initial site grading substantially complete.

Dakota Prairie Refinery, when complete, will be the first greenfield refinery built in the U.S. since 1976. It is a joint project with Calumet Specialty Products Partners, L.P. to develop, build and operate a 20,000-barrel-per-day diesel topping plant in southwestern North Dakota. The project will process Bakken crude and the diesel produced will be marketed within the Bakken region. Total project costs are estimated to be approximately $300 million.

Knife River Corporation, MDU Resources’ construction materials and contracting subsidiary, has moved approximately 1 million cubic yards of material since construction commenced March 26, despite rain-related weather challenges. In addition, they began preparing the foundation for 16 storage tanks planned for the facility and the construction of a bridge that provides operational access within the site.

Dave Podratz has been named the refinery manager at the facility where he will lead the organizational development, start-up and commissioning process of the refinery. Podratz brings refinery management expertise and more than 30 years of industry-related experience to the project.

“We are focused on constructing the facility on time and on budget and continue to target an in-service date in late 2014,” said David L. Goodin, president and chief executive officer of MDU Resources. “This project is a strong organic growth opportunity for us and based on our assumptions we expect it will generate EBITDA of $70 million to $90 million in year one, to be shared equally with Calumet.”

In addition to Knife River, other MDU Resources’ companies involved in the project include Fidelity Exploration & Production Company, which will supply crude oil to the facility; WBI Energy Inc., which will supply natural gas service to operate the facility; and Montana-Dakota Utilities, which will supply the facility’s electricity needs. MDU Construction Services Group Inc. also is a potential subcontractor for the facility.

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