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Associated Press, Published November 26 2013

ND tribe looks at expanded energy development

BISMARCK — The Three Affiliated Tribes is considering expanding a planned oil refinery on the Fort Berthold Reservation in western North Dakota before it is even built, and also considering construction of a natural gas plant.

Chairman Tex Hall said at a tribal energy seminar being held in Bismarck this week that he expects 3,000 wells to be producing 300,000 barrels of oil a day on the reservation within six years. The $450 million Thunder Butte Petroleum Services Inc. refinery being built near Makoti will have the capacity to process only up to 20,000 barrels daily into diesel fuel and other products.

"We will need a bigger refinery ... doesn't make sense to ship it down the road," Hall said. "There will be less of a (carbon) footprint to refine it here. We already have a 20,000 barrel facility; it just has to be bigger."

The tribe also is considering what to do with natural gas, a byproduct of oil production. Much of it is burned off in the oil patch because of a lack of pipelines and processing facilities.

Slightly more than half of the natural gas produced on the Fort Berthold Reservation is being flared, said Steven Gundersen, president of Tallsalt Advisors, an oil consultant contracted by the tribe. That is about double the statewide average.

"We're entirely too high," Hall said.

The tribe is considering possible locations for a gas plant that could cost up to $300 million, and seeking funding, the chairman said.

As more oil is produced on the reservation there will be more natural gas.

"The pace is moving so fast infrastructure just can't keep up," Gunderson said.

The tribe's refinery will be the first built in the U.S. in more than 30 years, according to the Interior Department. It is expected to be operating in about two years. Work began this fall on the first phase — a facility from which the oil will be shipped. That should be built by next summer.