Washington grants anti-pipeline groups a parting gift
The Obama administration has directed the US Army Corps of Engineers to deny an easement required to cross the Dakota Access Pipeline under Lake Oahe in North Dakota, leaving the whole matter up to the next administration. The US Army is asking owners Energy Transfer Partners and Sunoco Logistics to consider an alternate route.
The judgement is a big win for the Standing Rock Sioux Tribe, whose reservation lies less than a kilometre south of the river crossing. The tribe has repeatedly expressed concerns over the potential for a pipeline rupture and perceived violation of its treaty rights.
The Wall Street Journal notes it is extremely rare for Washington to intervene in a permitting process typically handled by "civil servants". The project is already 85% complete, making the decision to pull permits even more baffling. Pipeline experts are confident the decision could be easily overturned by the next administration.
However, it is unclear how quickly incoming President-Elect Donald Trump can reverse the Army's decision. Tunnelling under the river and completing commissioning could take several months, moving the in-service date to April or May at best. The company is under contract to ship volumes starting in January, and shippers could be in a position to renegotiate or even terminate contracts if the line isn't ready in time.
The Standing Rock Sioux have said they support a rerouting of the line, but other anti-pipeline groups won't be satisfied unless the project in cancelled in its entirely. The tribe has asked protestors to go home and refrain from further illegal actions against the project. Most of the protestors remain camped out on federal lands and refused court orders to vacate the area. Last week, a state judge ruled the protestors could not be forcibly removed.
Energy Transfer estimates revenue losses at US$450 million so far, climbing by US$84 million per month of delays. The company didn't hold back in responding to the permit denial, calling the move purely "a political decision" and the "latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favor of currying favor with a narrow and extreme political constituency." The company has no intent of rerouting the line, which would require a new round of public consultations and likely a full environmental review, potentially delaying the project for another year.
Unlike Keystone XL, which President Obama called a conduit for "extraordinarily dirty" oil from Canada, Dakota Access will transport up to 570,000 bbl/day of light sweet crude from North Dakota to an oil terminal near Pakota, Illinois. North Dakota produces about 1 million bbl/day of crude, making it the second-largest oil producing state in the US, after Texas. Lack of pipeline infrastructure has forced much of its production onto railcars.
Despite being the world's third largest oil producer, the US still imports about 8 million barrels per day of crude oil, about 40% sourced from Canada.