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Yellowstone county officials are rolling out the welcome mat for the developers of a proposed $500 million oil refinery being considered for the Billings area.

“We’re glad you’re here,” Commissioner Jim Reno said during a presentation by Quantum Energy Inc.

“What can we do to help you?” asked Commissioner John Ostlund.

Billings is one of five sites, three in Montana and two in North Dakota, being considered for new “clean energy centers,” plants sometimes called microrefineries, that would process crude oil from the booming Bakken oil play.

Andrew Kacic, chief executive of Quantum Energy, said existing infrastructure and a ready labor force both make Billings an attractive option for the proposed plant.

He said the Billings project would create 500 to 600 construction jobs. The 100 to 150 permanent employees would make at least $100,000 per year, he said.

Kacic said Quantum hopes to have more information on a proposed real estate purchase by the end of the week. He declined to identify where the company is shopping for real estate but said about 80 to 100 acres is needed.

“We are looking at trying to break ground in mid to late spring next year, and that will be dependent on the permitting process,” said Bill Bradley, project director for Bilfinger Westcon Inc., which is partnering with Quantum Energy.

The effort to control sulfur dioxide pollution in the Yellowstone Valley has existed for many decades. Sulfur dioxide pollution, which comes from industrial plants, has declined in recent years as industries have invested in new equipment.

Bradley said Quantum’s proposed plant would meet all environmental standards.

“One benefit is we’re starting with a state-of-the-art design,” Bradley said. “A lot of the existing refineries are bringing up the standard. We’re setting the standard.”

The proposed plant’s 20,000 barrel-a-day capacity is significant because it would be permitted under state environmental standards and would not fall under the jurisdiction of the federal Environmental Protection Agency, Kacic said.

Bradley said the plant’s water usage is fairly small compared to other refineries, about 150 gallons per minute.

“With the lighter, sweeter crude coming out of the Bakken, that process doesn’t take the amount of water that the heavier crudes do,” Bradley said.

The commissioners also asked about another sensitive topic: jobs.

“One of the problems we have when somebody comes in, a lot of times they bring in contractors from out of state,” said commissioner Bill

Kennedy. “Hiring local and making sure we have permanent jobs in this community is a big thing.”

“We do try to hire local,” Bradley said. “That’s where we get the best craftsmen. We have around 2,500 Montanans in our database who have worked for us across different projects.”

In response to the commissioners’ offer to help, Kacic said he has already met with officials from Big Sky Economic Development, Yellowstone County’s economic development agency. The company also hopes the permitting process will proceed smoothly.

Quantum Energy is a publicly traded company, involved in refinery development, land holdings and oil and gas development. Its outstanding shares are worth about $20 million. Lately its stock price has been trading at about 50 cents per share.

Kacic said Quantum has received a lot of interest from investors, and obtaining environmental permits is a key factor in the financing process.

The Bakken oil boom has ramped up demand for diesel fuel to around 75,000 barrels per day, but diesel production from within the region falls well short of that, around 27,000 barrels per day.

Quantum says each of its five proposed plants would produce about 6,000 to 7,000 barrels of diesel per day. In addition, each plant would produce about 6,000 barrels per day of lighter petroleum products, known as natural gas liquids, which include propane and butane. Naptha, another part of the crude stream, would be shipped to Canada for use in transporting oil from the tar sands.

The plant is also designed to capture carbon dioxide, which would be used in enhanced oil recovery.

In response to a question about why Quantum would invest in five relatively small refineries rather than one larger plant, Russell Smith, Quantum’s executive vice president, said:

“It boils down to three letters: EPA. Smaller plants built within different communities would fall under the jurisdiction of state regulators rather than more involved federal permitting, Smith said, in a previous interview.

Billings resident Deb Fischer also attended Quantum’s presentation and said she was concerned about how such a project could affect the community’s health and safety.

Fischer asked commissioners to “take some safety and health aspects into consideration.”

Noting she has a daughter with asthma, Fischer said the community has had problems with sulfur dioxide pollution and already has three oil refineries.

Fischer also said she was concerned about safety and referred to the recent explosive oil train wrecks. “The safety aspect is huge,” she said.

@ 2014 The Billings Gazette