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Finance

2008 Financial Information

Dakota Gasification Company operating highlights

• Dakota Gas earned net income of $128.0 million during 2008
• Dakota Gas returned a $104.9 million in dividends to its parent company, Basin Electric, in 2009 of which $19.9 million was passed through to members as a bill credit.

  Pollution control costs

  Dakota Gasification Company pollution control capital costs and operating expenses in 2008: Operation, maintenance and depreciation: $37,051,482 Pollution control capital costs: $126,051,508

The Basin Electric's board's plan for bringing the profits of Dakota Gas to Basin Electric's membership provides for a dividend and a bill credit each year based on Dakota Gas' prior year profitability. If Dakota Gas has cash in excess of working capital needs, it will be paid as dividends to Basin Electric to provide funding for its capital plan.

DOE Revenue Sharing

In 2008, Dakota Gas paid an estimated $58.2 million in revenue sharing to the U.S. Department of Energy (DOE) as part of an asset purchase agreement signed in 1988. The total amount paid to DOE as of Dec. 31, 2008 is approximately $380.8 million since the sale of the plant to Basin Electric. The U.S. government has now recovered more than $1.1 billion of its investment through revenue sharing and foregone production tax credits of $754 million. 

Strategies for the future

Dakota Gas' cost of production is tied to the fluctuations in the price of natural gas. Expanding coproduct revenue from zero in the early years to almost 40 percent of current revenue stream has helped that imbalance. After formally researching many other options, Dakota Gas concluded that it would continue to focus on cost management and revenue enhancement from existing plant capacity. Other strategies include:

• Adoption of an asset utilization process to help Dakota Gas achieve its goal of sub $5 per dekatherm gas through 2016. This process requires harmonizing three dimensions – plant utilization, plant availability and effective product marketing – in a safe and environmentally sound manner over the next decade. By producing and selling additional ammonia, reducing maintenance costs, improving plant production capacity, and improving CO2 revenue, Dakota Gas believes it can reduce the cost of production by about 20 percent.
• Adoption of process improvements for planning, executing, and tracking maintenance activities.
• Adoption of the “concept to completion” engineering philosophy, which allows an engineer to oversee a project from beginning to end.
• Adoption of a proactive approach to maintaining gasifiers. New gasification technology will be added that results in tighter operational control of gasifier conditions.
• Adoption of a marketing strategy for selling ammonia to other North Dakota wholesalers in support of continuous ammonia plant operation.
• Adoption of marketing initiatives using multiple sources of CO2 from Dakota Gas and potential partnering with parent company, Basin Electric Power Cooperative, on CO2 captured at its nearby coal-based power plants.

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2008 Annual Report

• Download report (PDF -13.5 MB)

The report is published by Dakota Gas' parent company, Basin Electric Power Cooperative, and contains information about Basin Electric, Dakota Gas and seven other subsidiaries.