INDIANAPOLIS, Feb. 7, 2013 /PRNewswire/ -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) ("Calumet") announced today that it has entered into a joint venture agreement with MDU Resources Group, Inc. (NYSE: MDU) ("MDU") to develop, build and operate a diesel refinery in southwestern North Dakota. The joint venture will be called Dakota Prairie Refining, LLC.
Calumet's participation in the joint venture will be through a wholly-owned subsidiary, Calumet North Dakota, LLC. MDU Resources Group, Inc.'s participation will be through its wholly owned subsidiary, WBI Energy, Inc.
The refinery is expected to process 20,000 barrels per day of Bakken crude oil primarily to produce diesel to serve strong product demand in the region. Construction of the refinery could begin late in the second quarter of 2013 with startup of the refinery expected late in the fourth quarter of 2014. The refinery's engineering and plant design are in the final stages, with total cost of the project estimated at approximately $300 million. The refinery is expected to employ approximately 100 people and will be located near Dickinson in Stark County, North Dakota.
The capitalization of the joint venture is expected to be funded through contributions of $150 million from MDU Resources Group and $75 million from Calumet and proceeds of $75 million from an unsecured syndicated term loan facility with the joint venture as the borrower. The term loan facility is expected to be funded prior to the end of the first quarter of 2013. Funding for the project will occur over the course of the construction period, with the majority of the direct funding by Calumet and MDU expected in 2014. The joint venture will allocate profits on a 50%/50% basis to Calumet and MDU. Calumet will cover the debt service cost of the lower interest rate term loan facility pursuant to the joint venture agreement. The joint venture will be governed by a board of managers comprised of representatives from both Calumet and MDU. MDU will provide a portion of the crude oil supply to the refinery, as well as natural gas and electricity utility services. Calumet will provide refinery operations, crude oil procurement and refined product marketing expertise to the joint venture.
"We are excited to expand into North Dakota with a proven partner local to the region. This joint venture allows us to continue our plan of growing in geographies with favorable feedstock options and niche product markets. The Bakken presents many opportunities that integrate well with our current business, and having this project inside the MLP allows us to capitalize on these opportunities right away," said Jennifer Straumins, President and COO of Calumet. "North Dakota and the entire Bakken region is growing rapidly, and we are excited to partner with a well respected company like MDU. We also appreciate the support we have received from the State of North Dakota in advancing the project," added Straumins.
Calumet is a master limited partnership and is a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents and waxes used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel. Calumet is based in Indianapolis, Indiana and has eleven facilities located in northwest Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, Texas and eastern Missouri. This press release includes statements that may constitute forward-looking statements. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. Factors that can affect future results are discussed in Calumet's Annual Report on Form 10-K and other reports filed by Calumet from time to time with the Securities and Exchange Commission. Calumet undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.
SOURCE Calumet Specialty Products Partners, L.P.