February 20, 2014

Tribal Council mulls finance options for refinery

By Jerry W. Kram

The Three Affiliated Tribes Tribal Business Council will consider financing more than half of the $450 million that is expected to be needed to complete the proposed Thunder Butte Refinery near Makoti.

The Council has already allocated $75 million for the 2013 and 2014 fiscal years. Thunder Butte CEO Richard Mayer told the council that $48.4 million of that money is designated for the construction of phase one of the project, which consists of an oil transload yard and offices that will be built this spring and summer. He said the remainder of the money will go for engineering and design costs for the second phase of the project.

Mayer appeared before the Tribal Business Council to ask that the MHA Nation consider investing more money in the project for the 2015 and 2016 fiscal years, which starts in September. That is when construction is expected to start on the actual refinery. The plan is for the refinery to be built in modules in California and then assembled at the site on Highway 23 just west of Makoti.

Mayer said a financial analysis showed that the tribe could invest up to $125 million of oil revenue a year in the project for the next two years and still be able to meet its other commitments. He said the tribe should earn about $450 million in oil taxes in royalties in 2015. Mayer said the funding would be a loan from the tribe to the refinery. Thunder Butte Petroleum Services would repay the loan at market interest rates over a period that would be negotiated between the tribally owned company and the tribe.

The Weather Network