North Dakota has moved to the second highest oil producing state in the nation, surpassing both Alaska and California in the past two years. Along with this massive increase in production and well field development has come a massive expansion of infrastructure that has driven the demand for diesel fuel and other distillates to unprecedented levels. Approximately 180 high tech drilling rigs are drilling 10,000 feet deep wells with horizontal laterals through the rich shale. This extraordinary rate of well development has resulted in over 9,000 producing wells with production of more than 900,000 barrels of light sweet crude every day. The development of these wells, and the collection of crude oil from them, have created a significant demand for diesel to power heavy equipment as well as the on-road trucks carrying crude, water and industrial supplies throughout the region; the North Dakota Association of Oil Producing Counties has estimated 2,024 truck movements are needed per well drilled.
North Dakota’s economy is booming and the Bakken formation is playing a starring role in this economic picture. Development of an oil refinery in this region will provide the capability to profitably produce diesel fuel for consumption in North Dakota's high-demand area.
The high costs of transporting crude out of the region, and the ever-increasing demand for refined diesel within the region, have created an opportunity for expanded refining capacity in the region. Recently MDU and Calumet have joined to develop the first new greenfield refinery in the lower United States in more than 35 years (1976) which will be located near Dickinson, ND. While this refinery will produce approximately 7,000 barrels of diesel a day, it will not come close to meeting the demands in North Dakota and eastern Montana which is estimated at a daily demand of over 53,000 barrels a day creating an opportunity for Dakota Oil Processing to construct an additional refinery.
Deeply discounted Bakken crude for feedstock and the extraordinary high demand for diesel have created the opportunity and need for refinery capacity in the region. The ability to take advantage of this situation in the short run is the basis for the development of the Trenton Diesel Refinery.