Dave Goodin, who moved up through the ranks before taking over as president and chief executive of MDU Resources in January, spoke about the company and its business prospects June 25 as part of the Boise Metro Chamber of Commerce's CEO Speaker Series.
He said the company, which will celebrate its 90th anniversary next March, has "three major buckets ... and the stool is very balanced right now on those three legs": construction, exploration and production, and the "regulated section" that includes Intermountain Gas.
His comments are condensed from a transcript prepared by chamber PR Director Caroline Merritt.
MDU IN IDAHO
"Clearly MDU Resources has a very solid footprint in Idaho. We appreciate very much the business climate in Idaho. At the same time, you can see we pretty much have the lower Snake River Plain quite covered between Knife River [a construction company] as well as Intermountain Gas along the Snake River Plain.
"About 1,000 employees call Idaho home for us. The last several years, some of those employees are spending time in the Bakken area of Western North Dakota. But, you can see we've got a fair amount of capital invested in our state here of Idaho, and at the same time you can see we continue to invest about $47 million this year, primarily in pipe infrastructure for Intermountain Gas and some fleet and ... light replacements within Knife River."
"We've been on the New York Stock Exchange actually since 1948. So, we've got a pretty rich history also of paying dividends. And so, I think that's important in certain times and particularly for yield-looking investors. In fact, we've earned some high achiever dividend aristocrat awards you might say. But 75 years of uninterrupted dividends in the last 22, actually we've been increasing that year over year.
"When we first listed on the New York Stock Exchange in 1948, we were $10 million. That was our market cap. Let's fast forward to today: As of the moment we're $4.75 billion as an organization.
"So, there's a footprint, if you will, of electric and gas utilities. We serve right at a million customers."
NEW DAKOTA REFINERY
"We're in the process of constructing from the ground up a "greenfield" refinery - the first of its kind in 37 years in this country. The last refinery that was built from the ground up, a greenfield, was in 1976. It's in Western North Dakota [near Dickinson]. We're planning to take sweet, light Bakken crude [and separate it] into three main products. The top third will be called naphtha, the middle third will be called diesel, that's our end product, and the bottom third is called atmospheric tank bottom. So, we want to take ... 20,000 barrels a day, cut it into thirds and sell diesel to a local market that today is way grossly underutilized. We want to take local crude and ... refine it right there and then open the value on the back end of the plant and sell it to the long line of trucks that are lined up to take it.
"That's really the business opportunity that we see. Those other thirds of the barrel we want to send off to other markets. Oh, and by the way, we're joint venturing this with an organization called Calumet. We found a partner that has 11 facilities across the U.S. and processed 160,000 barrels a day already. And they want to take that bottom third of the barrel and take it to specialty plants that they have [for] ... motor oils, lubricants, specialty products.
"This is a real exciting business opportunity for us. But it's about 10 percent of our capital expenditures this year. So it doesn't get all of our focus."
"Is the limitation or maybe the reason why we haven't built a refinery in 37 years a combination of permitting, regulatory challenges, or just the market?
"I would say maybe some or all of the above. Clearly, we like business in business-friendly areas in North Dakota. We have some deep roots there. I think that's probably why Calumet came knocking on our door. We know energy.
"I would say it's a challenge - siting, permitting, not in my backyard, there's some of that. There's a major need here clearly. There's a shortfall in the market. And it's not all oil-driven. Agriculture still is the top contributor to North Dakota GDP to date.
"Economics seem to make sense, also. The Bakken sweet crude is very light and it's very targeted for this kind of a distiller. You can't take heavy Alberta tar sand oil and make the same kind of refinery. It's a very light, sweet crude. If you have coffee in a vial, that's almost how this crude looks.
"[So we] have the right product, in the right market, in a supportive state regulatory environment. I think those are the things that kind of help.
"Now, that doesn't mean there were any compromises when it came to our permitting, our siting. It all went through an EPA process. We got a comment from the national park system, that's got Theodore Roosevelt Park, you know, 20 or so miles away. And we got three comments from local ranchers. The EPA was more, 'You didn't quite do this calculation on some greenhouse gas emission,' but no real opposition. The National Park Service said, 'Don't screw up our view shed of Painted Canyon,' which is kind of North Dakota badlands. And then the ranchers said, 'You know, I've lived here all my life, don't screw it up.' Those were the only comments we received on this project."
[An audience member asked if regulatory issues on the Keystone Pipeline affect MDU.] "Yes and no. We would actually serve electricity to one or more of the pumping stations along that way. So it could be a customer for us. You've got to put compressors along the pipeline, hundreds and hundreds of miles. So it could be a customer of ours.
"Today, there's a lot of rail takeaway in the Bakken, which is actually a more preferred option. So actually the pipeline may be of less significance than the rail today, although, you think, long-term, pipe is 30-40 percent of the cost of rail.
"I'd have thought it was a slam dunk one person's opinion. ...
"Uncertainty is just not good in the energy business. It doesn't lay out a very good flight path as to where we're going, where we're headed, because these are major, major investments and you don't want to be stranded having an empty pipe one day, either."