August 2020, Vol. 247, No. 8
A Week Like no Other
Energy Transfer Vows to Keep Dakota Access Oil Flowing
By Jeff Awalt, Executive Editor
Energy Transfer vowed to fight a court order to shut down and empty the Dakota Access oil pipeline (DAPL), contending that U.S. District Judge James Boasberg overstepped his authority with the ruling.
“We intend to immediately file a motion to stay this decision, and if not granted, to pursue a stay and expedited appeal with the Court of Appeals,” Energy Transfer Spokesperson Lisa Coleman said in a statement to Pipeline & Gas Journal.
Energy Transfer believes the U.S. Army Corps of Engineers (Corps) has the ultimate jurisdiction over the matter, pursuant to its regulations governing Corps property, she said.
Judge Boasberg, who serves on the U.S. District Court for the District of Columbia, said the Corps failed to produce an adequate environmental impact statement (EIS) when it approved a segment of DAPL that passes beneath Lake Oahe, violating the National Environmental Policy Act (NEPA).
“Given the seriousness of the Corps’ NEPA error, the impossibility of a simple fix, the fact that Dakota Access did assume much of its economic risk knowingly, and the potential harm each day the pipeline operates, the Court is forced to conclude that the flow of oil must cease,” he wrote.
The 570,000-bpd DAPL is the largest pipeline from North Dakota’s Bakken Shale oil fields and a key artery to Midwest and Gulf Coast refineries. The pipeline’s capacity is equivalent to about 60% of Bakken oil production in June.
Without DAPL, which began operating in June 2017, producers can ship oil through the limited remaining pipeline capacity serving the region, and by rail.
“We believe that the ruling issued this morning from Judge Boasberg is not supported by the law or the facts of the case. Furthermore, we believe that Judge Boasberg has exceeded his authority in ordering the shutdown of the Dakota Access Pipeline, which has been safely operating for more than three years,” Coleman said.
“We will be immediately pursuing all available legal and administrative processes and are confident that once the law and full record are fully considered, Dakota Access Pipeline will not be shut down and that oil will continue to flow,” she added.
Native American tribes and environmental groups who have protested DAPL’s construction from the outset celebrated the ruling, which came only a day after Dominion Energy and Duke Energy announced the cancellation of the long-delayed, $8 billion Atlantic Coast Pipeline.
U.S. Energy Secretary Dan Brouillette blamed activists for the high-profile pipeline setbacks. “I’m not quite sure what they’re cheering except for perhaps the loss of jobs all throughout America,” he said.
American Petroleum Institute President and CEO Mike Sommers also expressed deep concern about the court ruling to shut down the Dakota Access Pipeline and the cancellation of the Atlantic Coast Pipeline, announced in July.
“Our nation’s outdated and convoluted permitting rules are opening the door for a barrage of baseless, activist-led litigation, undermining American energy progress and denying local communities the environmental, employment and economic benefits modern pipelines provide,” Sommers said. “The need to reform our broken permitting system has never been more urgent.”
Activists have turned heavily toward the courts in recent years as a strategy to stop pipeline construction, resulting in delays and higher costs that sometimes doom the projects.
In February, Williams canceled its proposed Constitution natural gas pipeline from Pennsylvania to New York, following years of opposition from politicians and environmental groups in New York.
And, despite a victory last month at the U.S. Supreme Court over a critical permit for the Atlantic Coast natural gas pipeline, Dominion and Duke said that “recent developments have created an unacceptable layer of uncertainty and anticipated delays” for the 600-mile (965-km) project, which would deliver Marcellus Basin gas across West Virginia and Virginia into North Carolina.
Energy Transfer hopes to buck this trend, vowing to challenge the ruling and keep oil flowing through DAPL.
“The economic implications of the Judge’s order are too big to ignore, and we will do all we can to ensure its continued operation,” Coleman said.
“We will continue to cooperate with the Corps through their process as we believe, as does the Corps per their filing with the District Court, that the proper procedures were followed in granting the original easement and that their work will reconfirm that the easement across federally owned lands in North Dakota was properly granted.”
Shutting down “this critical piece of infrastructure would throw the U.S. crude supply system out of balance,” inflict more damage on an already struggling economy and jeopardize national security, Energy Transfer argues.
“This was an ill-thought-out decision by the Court that should be quickly remedied,” Coleman said.
With the shutdown of the Dakota Access Pipeline, shippers are left few alternatives: vie for the limited capacity remaining out of the Bakken or turn to rail in the second-largest oil-producing state in the U.S.
Shipping by rail will be among the few options left for oil producers in the second-largest oil-producing U.S. state, providing a boon for transport firms forced to furlough workers during the coronavirus-triggered economic downturn.
“I think everybody is forming their game plan now, and if they have tank cars, they’re probably thanking their lucky stars,” one source familiar with Bakken rail operations told Reuters.
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