A Williston businessman who runs a water treatment company has landed a $40,000 state grant to study the possibility of developing a new oil refinery in northwestern North Dakota.

As planned, the refinery would be capable of processing 50,000 barrels of crude daily. That is slightly less than the present capacity of North Dakota's only oil refinery, the Tesoro Corp. plant near Mandan.

Mel Falcon formed a company, Northwest Refining Inc., in Williston last June in connection with the project, state records show. The company will be matching the state grant to pay for a preliminary engineering study, Falcon said in his application for the money.

North Dakota's Industrial Commission voted Wednesday to endorse the grant, which was recommended by a state committee that reviews grant requests for oil and gas projects. The Oil and Gas Research Council gets up to $3 million in oil taxes every two years.

The grant application's reviewers said the study must include a construction timeline, an assessment of the refinery's potential market, a plan for handling regulatory and air pollution issues, and a review of how the refinery's products will be shipped.

Falcon is chief executive officer of Aqua-Envirotech Manufacturing Inc. of Williston, which makes and services water and wastewater treatment systems. He said ENGlobal Corp., a Houston engineering firm with experience in refinery work, will handle the study.

The report will evaluate a potential refinery site and include information on its possible layout and what types of products it will produce, the grant application says.

Building a refinery would take three to four years and require up to 1,000 construction workers, the application says. It would need a permanent work force of as many as 500 people, it says.

"If the preliminary engineering feasibility study determines there is a need for an oil refinery in the area, it is the intention of Northwest Refinery Inc. to proceed with securing the financing and selecting a firm for the planning and design of the oil refinery," the application says.

"Depending on the size of the facility, the economic impacts to Williston and the surrounding area could be immense."