Higher commodity prices boost Dakota Gas financials

Dakota Gasification Company has been doing better than budget for the fourth month in a row largely due to a hike in commodity prices.

Katrina Wald, Basin Electric manager of financial reporting and accounts receivable, said natural gas prices spiked in February during the energy emergency. “Natural gas prices have stabilized and they’re coming in closer to projected, but we did see a benefit that month,” she said. “Oil prices for the year have been quite a bit higher than budget and a lot higher than last year. Last year, oil prices tanked with effects of COVID-19. Higher prices result in Dakota Gas receiving more money for its tar oil. The plant looks at prices every day and determines which products to produce more of based on that. At this time, it’s more economic to produce tar oil than synthetic natural gas. So, not only are we benefitting from higher prices for tar oil, but we’re benefitting from higher volumes as well.”

Wald said fertilizer prices have been about 20% higher than projected, year-to-date through May. “One of the factors we don’t mention often is our partnership with N-7. N-7 is the marketing venture that Dakota Gas is part of, and they look for the best place for our products to go,” she said. “They try to balance Dakota Gas with the other N-7 plants to find the best pricing for Dakota Gas. That results in better net-back pricing because we lessen the freight- and transport-related costs associated with fertilizer sales.”

She said demand is good for diesel exhaust fluid as well. “Those volumes are up 25% over budget, so that’s benefitted Dakota Gas in helping them to beat their budget for the year,” Wald said.

Trinity Turnbow, assistant plant manager for Dakota Gas' Great Plains Synfuels Plant, said while prices will go up and down with the market, employees can control two other factors. “Plant production has been very near budget for the past couple months, and tar oil has been well above budget. Production of fertilizer has been up to where we’ve been able to meet the demands of the spring season which is when prices are at their highest,” he said. “On expenses, we’ve been below budget on major expenses including materials, contracted services, freight, et cetera. We have good cost containment in place and we’ve been doing well this year.”

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