More than three years after it was first given an Air Quality Permit To Construct an oil refinery on the doorstep of Theodore Roosevelt National Park, Meridian Energy Group has received another 18-month permit extension to begin building the refinery.

The company said when the permit was first granted in June 2018 that it would be in operation by now, processing 49,500 barrels of oil a day at its proposed Davis Refinery just east of Medora, N.D. But aside from some dirt work on a piece of leased land, there’s been no indication the company, beset by legal and financial problems, is anywhere near being ready to build its refinery.

The permit extension was granted by the North Dakota Department of Environmental Quality this week after company officials promised, in a face-to-face meeting, to “commence construction” immediately. The thing is, “commence construction” doesn’t mean they are going to actually start building the refinery.

In danger of having its permit expire last spring, the company dragged out a pair of obscure 1978 and 1980 rulings by the U.S. Environmental Protection Agency, whose regulations also apply to state regulators. The EPA says that “commencing construction” means that a company must “either 1) begin a continuous program of physical on-site construction or 2) enter into a contractual obligation to undertake a program of on-site construction to be completed within a reasonable time.”

Meridian has obviously not satisfied the first requirement of “physical on-site construction” — the proposed site sits as bare today as it was the day the bulldozers first scraped it clean three years ago — but company officials showed up at the State’s Department of Environmental Quality this past week with a copy of a contract with a company called McDermott for the “design, engineering, procurement, fabrication, and construction” of the refinery.

(Note: this McDermott outfit is the same company that filed for bankruptcy in 2020, although I think they’ve emerged from that through reorganization. As I wrote a couple of months ago, “birds of a feather …”)

But DEQ officials have studied the documents (you can read the correspondence between DEQ and Meridian here — letters dated Sept. 13, 2021) and have determined that the contract satisfied the second requirement, in spite of the shaky financial position of both companies, and so it’s granted the extension of the permit.

There’s one catch.

The EPA ruling says the company can’t just sign the contract in order to get the permit and then bail out. It says “the contract cannot be canceled at any time without substantial loss” and says “substantial” means the contract must be for at least 10 percent of the total project cost. DEQ officials couldn’t share the contract with me, but they assured me it met the criteria. The company has bantered around a figure of about a billion dollars as the total project cost, so by signing the contract the company is on the hook for a $100 million or so.

In other words, Meridian must now start — and complete — building the refinery in a reasonable time or forfeit $100 million. Well, fine. Except, for a company like Meridian, which doesn’t have $100 million, that part of the deal is meaningless. It doesn’t have any money to lose. It’s been hanging bad paper all over the country, screwing employees to the tune of $600,000 and contractors for $2,200,000 in unpaid bills, not to mention the unpaid lease payments in California and Texas, which apparently got Meridian evicted from its fancy offices in Houston and Los Angeles.

But because it has its permit, for the next 18 months it can simply keep doing what it’s been doing, which is nothing, except selling worthless stock.

You see, Meridian says it’s going to build a refinery, but it hasn’t even got enough money to buy the land to put it on. Meridian is still squatting on Greg Kessel’s pasture. Greg, and every other North Dakotan, better be careful where they step. We all know what happens when a human, or other critter, squats on the prairie in western North Dakota.

This sleazy bunch knows they’re not going to build a refinery this fall, or maybe ever. They just need to keep their permit so they can keep bilking retirees out of their 401(k)s to pay themselves their fat salaries.

There are good people at the DEQ, and I’ve talked to them regularly, but they have evil bosses. Gov. Doug Burgum looks at western North Dakota with dollar signs in his eyes, ignoring the precious natural resources (like national parks) that need protection in favor of raking in the tax dollars to fund his dreamy economic development ideas (Main Street Initiative? How’s your main street looking, Hettinger? Napoleon? New Rockford? Take a look at your new census numbers, and your high school graduating classes with graduates you can count on your fingers and toes, with leftovers.).

And Dave Glatt, his DEQ chief (I call him the Destroyer of Environmental Quality) makes sure nothing stands in the way of the oil and gas industry. When I talked to the folks at the DEQ this week, I told them that I’d be writing about them and that they weren’t going to like some of what I said. Mainly that their renewal of the permit means Meridian can continue to bilk senior citizens out of their retirement accounts. I said I understood that that is beyond their scope of regulation, but I was pleased to hear one of the DEQ staff say that maybe it was time to let some other state agencies take a look at this company. I agree, I said. Like, maybe the attorney general?

And so Meridian now has another 18 months to pursue its project, promising to build an oil refinery on a piece of land between Belfield and Medora, owned by farmer Greg Kessel, who has also been given a seat on the board of directors of the company.

I had a chance meeting with Kessel recently. A couple of years ago, Meridian’s engineering firm, SEH hired a local contractor to go onto a quarter section of land next to his farmstead and level it and put a big earthen wall around it. The wall, which looks like a big dike, is about 15 feet high on three sides. The south side is open to allow access.

It’s been the subject of some speculation by the neighbors. The first summer it sat empty, and the dust of summer winds created huge clouds in the neighborhood. The next year, Kessel seeded some kind of grass to keep the dust down, and it became a big weed patch. This year, he planted barley on it.

I stopped to take a look at it in August, and it appeared to have been combined. While I was looking, Greg got into his pickup and came to visit. I asked if he had gotten a crop, and he said no, the drought got it. He said the drought was the worst in his lifetime, even worse than the one in 1988.

I asked him if he thought Meridian was really going to build a refinery there. I said their financial picture sounded pretty grim. He reassured me there was going to be a refinery there, and said, “They’ve got the money.”

Well, I was surprised to hear that. But apparently to reassure the DEQ staff, and people like Greg Kessel, that it is ready to build, Meridian executives are spreading the word around that their original finance company, the giant New York firm Morgan Stanley, is going to provide the equity capital for the project. Morgan Stanley had signed an agreement to do that back in 2018, but the agreement was only good for 12 months (Morgan Stanley apparently is not as patient as the DEQ) and when it expired in late 2019, it was not renewed. I haven’t been able to confirm that Meridian has gotten a new agreement. But given Meridian’s shaky financial status, I’d be surprised.

So I asked Greg Kessel if Meridian had paid him for the land yet. He said no, but “I’ve been taken care of.” I didn’t pursue that any further.

I also didn’t ask him about the Mechanic’s Lien filed by Meridian’s engineering firm, SEH, against the land he owns, and against him personally, and also Meridian, for $2.2 million. SEH filed a lien against the property in November 2019, stating, in the record on file at the Billings County Courthouse, it had not been paid for “Site preparation and grading work and additional Agreement between SEH Design/Build and Meridian Energy Group, dated June 26, 2018.”

I did ask at the courthouse, though, if the lien is still in place, and learned that it is. So, more than three years after Meridian’s engineering firm completed its work at the site, on Greg Kessel’s land, the bills have still not been paid.

I’m guessing that’s probably the reason Meridian hasn’t bought the land (in addition to not having the money to pay for it) — as long as the lien is in place, Kessel can’t sell the land. Unless they decide to go to court and slug it out, SEH gets to determine the fate of the land. Meridian doesn’t own it —Kessel still does—but it can control its fate as long as the lien is in place.

My, what tangled webs we weave …

Meanwhile, Meridian still has slick-talking salesmen working the phones, rounding up investments to keep the paychecks coming for company executives. According to its latest SEC filing last April, the company had sold $11,233,516 worth of stock out of a $60 million offering listed as first offered in 2018. That money is apparently all gone, since they’re not paying their bills.

One other thing that makes me skeptical about Morgan Stanley getting involved again, by the way, is the credibility of some of the company’s officers. Big investment firms pay attention to things like that. The company’s representative who submitted the latest SEC report is its Executive Vice President, Frank Goseco.

I’ve written about Goseco before. He’s the disbarred California lawyer with a rap sheet a mile long, including multiple convictions for drunk driving, burglary and leaving the scene of an accident. His law license was suspended a number of times over the past 20 years, and he was finally disbarred in 2019, while he was serving as executive vice president of Meridian Energy Group, a position he apparently still holds, according to the company’s latest SEC report, which has his name and title at the bottom as the company’s official representative. The California Bar Association maintains a 486-page file on him, with references to various crimes and instances “which may or may not involve moral turpitude.”

Anyway, he’s the guy who does the company’s reporting of stock sales to the SEC. And speaking of stock sales, I visited again this week with my new friend Richard from the East Coast, who I’ve also written about before, the fellow who invested his entire 401(k) account (more than $100,000) in Meridian stock back in 2017. I asked Richard how his stock was doing.

“Just fine,” he said. “I’m getting 6 percent dividends.”

“Really? You’re getting regular checks from Meridian?”

“Oh, no, I’m getting stock certificates. I must have over a thousand shares by now.”

“But have you gotten any money back on your investment?

“No, I don’t think I’m the one who’s going to get rich on this, but my grandchildren are.”

Uh huh.

Good luck, Richard. And good luck Greg Kessel. I hope neither of you is being taken for a ride. Just be careful where you step.