US-based diversified energy company MDU Resources along with Calumet Specialty Products Partners, has begun the construction of Dakota Prairie oil refinery.

The diesel refinery will be set up on a 318 acre site located west of Dickinson in Stark County, North Dakota, US.

Dakota Prairie facility will be able to process 20,000 barrels per day of Bakken crude oil.

MDU Resources president and chief executive officer David L Goodin said the state officials and agencies have supported the project.

"Their permitting process was rigorous, but at the same time they helped us identify and solve problems that are involved in a complex project such as this," Goodin added.

Calumet Specialty Products Partners general partner president and chief operating officer Jennifer G Straumins said, "This facility will help supply North Dakota’s growing diesel fuel market, and will be a good contributor to the state and local economy."

Construction of the facility is expected to take 20 months.