On February 8th, 2019, Meridian entered into an option agreement establishing site control on a 1,280-acre parcel of land just north of the community of Kermit in Winkler County, Texas, in the heart of the Permian Basin, where Meridian intends to build and operate a second full-conversion crude oil refinery (“Permian Refinery”). Based on a comprehensive review of various siting issues, Meridian has allowed its option on this site to expire while renegotiating its terms with the master lease holder, and at the same time is evaluating potentially more viable alternative sites in the area. The Permian Refinery would have a throughput capacity of approximately 60,000 bpd and is expected to be permitted as a Synthetic Minor Source, the same air quality permitting classification as Davis. The Company anticipates that most of the key project strategies and commercial arrangements for Davis, such as for engineering and construction, crude supply and offtake will be replicated.

There will be up to 100 new direct hire jobs created at the Meridian Permian Refinery. Job creation studies by the State of Washington for refineries located in Anacortes, Washington, show a job multiplier effect of up to 12:1. If the same held true in Winkler County, this means there will be total job creation, including indirect and induced jobs, of up to 1,200 new jobs for the local community.

The Permian facility will also be permitted as a Synthetic Minor Source (“SMS”). The Davis Refinery is the first full-conversion crude refinery ever to be permitted as a Synthetic Minor Source, and Meridian believes that Davis, and now Permian, will be the cleanest refineries on the planet when they are operational.

The Meridian facility in the Permian Basin will have a throughput capacity of approximately 58,000 bpd and will otherwise be modeled on the Company’s North Dakota Davis Refinery, which is currently in construction.

Meridian Energy conservatively estimates this project to take about three years to begin full commercial operations, although it could be less.

“Meridian’s success on the Davis Refinery demonstrates that the domestic refining industry is ready for fundamental change, and Meridian believes that the crude supply and strong demand from the refined products markets indicate that the Permian Basin is the next place for Meridian to locate a Davis-style crude refinery. In fact, Meridian’s analysis indicates that there may be a need for more than one such facility in order to fully serve the needs of the Permian Basin.”

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