The state needs more pipelines before considering building a new oil-to-gasoline refinery, says Mark Makelky with the Pipeline Authority.

Makelky recently released a white paper on pipelines and refined products, detailing the challenges and opportunities with building a new or expanding the existing refinery.

The Oil and Gas Research Council is providing for a study to determine whether a private, 100,000-barrel-a-day refinery in Williston would be economically feasible. Three Affiliated Tribes also is working on permitting a 15,000-barrel-a-day refinery, which would use a niche supply of crude out of Canada and refine it into jet fuel; that fuel could potentially be marketed to Minot Air Force Base. American Lignite Energy is looking at a coal-to-liquids plant that could produce more than 1.38 million gallons of liquid fuel a day, and Tesoro is increasing its on-road diesel fuel production.

Having a refinery in Williston could increase the value of the oil produced in the area, said Lynn Helms, director of the state Department of Mineral Resources.

"Putting money into this facility in Williston, we thought was a good idea,"Helms said.

The North Dakota portion of Williston Basin is producing 121,000 barrels per day total; with the Montana portion, the area is producing 210,000 barrels per day.

"If they build a 100,0000-barrel-a-day refinery, they wouldn't need to (transport the oil out of state to be refined)," he added.

The study on the feasibility of the facility is due out in September.

Makelky said current pipelines could not support another 100,000 barrels per day in product, input or output, and new pipeline projects would bear significant costs:$35,000 to $50,000 per inch diameter per mile of length. On top of that, the cost of a new refinery is estimated at $24,000 per daily barrel of oil processed, or $2.4 billion for a 100,000-barrel-a-day refinery.

Due to the state's balanced supply and demand - North Dakota used about 828 million gallons of branded and unbranded gasoline and diesel in 2007, compared to the 881 million gallons of just Tesoro branded gasoline and diesel produced in Mandan - the product would be shipped and marketed out of state. And another refinery would not mean lower fuel costs.

About 40 percent of Tesoro's product is used in state; Cenex also serves a large portion of the state's retail market, from a pipeline which runs from Montana, through Minot and ends in Fargo.

The market for selling fuel is already competitive, Makelky said.

"I think the big concern is going to be on the marketing side,"Makelky said. "The concept that a refinery sitting here in North Dakota drives down prices (is incorrect)."

"To get out there and chase 100,000 bpd of new market, I just struggle with where that is practical, within an economic range,"he added.

Makelky agreed that all the options should be explored, and that any new refinery that identifies a niche, such as the Three Affiliated Tribes concept, would have the fiduciary advantage.

(Reach reporter Crystal R. Reid at 250-8261 or at crystal.reid@;bismarcktribune.com.)