July 10, 2020 -- Pipeline Politics
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This is what all the fuss is about. This graphic shows the path of the Dakota Access Pipeline crossing of Lake Oahe, below the Northern Border natural gas pipeline. (Click to enlarge)
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DAPL Shutdown Order Shocks North Dakota
Pipeline Disruption Could Cost Economy Billions
Oil industry leaders and state officials were stunned this week when a federal judge ordered that the Dakota Access Pipeline be shut down and emptied, despite the fact the 1,176-mile pipeline has been operating safely for more than three years.
U.S. District Judge James Boasberg's order effectively nullifies an easement for the pipeline to cross the Missouri River granted by the Corps of Engineers based on an environmental assessment. The judge issued a
ruling in March that the Corps must instead complete a full environmental impact statement on the project, and sought comments from parties asking whether DAPL should be shut down while the environmental review was completed.
In a 24-page
order issued Monday, Boasberg said he was "mindful of the disruption such a shutdown will cause," but said he concluded that the pipeline must be shut down.
"Clear precedent favoring vacatur during such a remand coupled with the seriousness of the Corps' deficiencies outweighs the negative effects of halting the oil flow for the thirteen months that the Corps believes the creation of an EIS will take," Boasberg wrote.
The Corps' decision to grant the easement had been challenged by the Standing Rock Sioux Tribe, which has been represented by attorneys for the environmental extremist group Earthjustice. Boasberg noted in his ruling that the Tribe pointed to gaps in the Corps’ analysis, including the likelihood that the pipeline’s leak detection may not work, that it was not designed to catch slow spills, and that the worst-case scenario used by the Corps was possibly just a fraction of what a real spill could be.
Ironically, it was Boasberg who issued a
ruling in September 2016 which rejected the Tribe's argument that the pipeline could damage important cultural resources. The judge noted that DAPL runs parallel to the existing Northern Border natural gas pipeline, and that "Dakota Access will also use the less-invasive HDD (horizontal directional drilling) to run the pipeline, which will require less disturbance to the land around the drilling and bury the pipeline at a depth that is unlikely to damage cultural resources."
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DAPL Shutdown "Crippling"
Damage Could be Permanent
The state of North Dakota intends to fully engage in the effort by Energy Transfer Partners, owner of the DAPL pipeline, in its effort to overturn the judge's ruling that the pipeline be shut down.
Five North Dakota state officials previously submitted amicus briefs in support of continuing operation of the pipeline while the environmental impact study is completed. (See
May 8 WDEA newsletter). At a meeting this week of the North Dakota Industrial Commission, Governor Doug Burgum made it clear the state will again make its case that DAPL should be allowed to continuing moving North Dakota crude oil while the Corps of Engineers completes the EIS.
DAPL is currently capable of transporting up to 570,000 barrels per day. Justin Kringstad, director of the ND Pipeline Authority, said replacing that takeaway capacity is possible by using rail and filling other crude oil pipelines. Kringstad said the state now has about 300,000 barrels/day of rail capacity, which combined with capacity in other pipelines means he state could export about 1.1 million barrels per day. Additional rail capacity can be added, which Kringstad will take some time. But he said it will also add $5.00 or more per barrel to the cost of shipping crude oil out of state, on top of the existing $8.00/bbl differential because of the state's distance from the market.
Gov. Burgum said the additional transportation cost would likely stop North Dakota's oil industry recovery in its tracks, a fact which he said is important to impress upon the judge.
Click
here to listen to Burgum's comments.
Lynn Helms, director of the Department of Mineral Resources, said the additional cost to transport Bakken crude will likely discourage additional drilling in North Dakota. Helms said producers may shift their investment to other shale plays, and it may never come back.
Click
here to listen to Helms' comments.
Burgum said the economic ripple effect from shutting down the pipeline would be severe, affecting not just the pipeline company and oil shippers, but state and local governments that depend on oil tax revenue and the jobs the industry generates.
Click
here to listen to Burgum's comments.
Burgum said the judge's order sets a dangerous precedent. He said shutting down an existing project that met all permitting requirements could have a chilling effect on future infrastructure investment.
Click
here to listen to Burgum's comments.
Burgum said while there may be "theoretical alternatives" to replace the loss of pipeline takeaway capacity, they cost so much that production does not occur, the economic impact of which is "massive."
Click
here to see Kringstad's slide presentation to the Industrial Commission. Click to
read an article from the Minot Daily News about the reaction of North Dakota's Congressional delegation to the decision.
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Company Files Appeal of Shutdown Order
Stating that it believes Judge Boasberg's shutdown order "is not supported by the law or the facts of the case," Energy Transfer Partners has appealed the decision to a three-judge panel of the DC Circuit.
In a statement issued Monday, the company said it believes Boasberg exceeded his authority in ordering the shutdown of the Dakota Access Pipeline.
"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," the company said. "We also believe that the Army Corps of Engineers has the ultimate jurisdiction over this matter, pursuant to its regulations governing Corps property."
"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."
The statement went on to say that the economic implications of the judge’s order are too big to ignore so ETP will do all it can to ensure its continued operation.
"Billions of dollars in tax and royalty revenue will be lost by state, local and tribal governments in North Dakota, South Dakota, Iowa and Illinois," the statement read. "Farmers will suffer as crude transportation will move to rail, displacing corn, wheat and soy crops that would normally be moved to market."
Click
here for a story about Energy Transfer CEO Kelcy Warren's plan for the appeal.
Stoppage of Oil Flow Will Not Be Immediate
While Judge Boasberg's ordered ETP to shut down the pipeline and empty it by August 5, the company said it will take much longer than that.
Company officials estimated it will take upwards of three months to complete the shutdown and empty the pipeline. The company must complete a purge-and-fill process, draining individual segments of the line and injecting it with nitrogen to prevent corrosion while it is not in operation.
Click
here
to read more about what it takes to shut down a pipeline in the Bismarck Tribune.
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WDEA Issues Plea to Stop DAPL Shutdown
Unnecessary Action Would Inflict Lasting Damage
The Western Dakota Energy Association issued a plea to U.S. District Judge James Boasberg to rescind his order to shut down the Dakota Access Pipeline because of the widespread and potentially long-lasting economic damage such a shutdown would inflict on North Dakota communities.
“We do not believe Judge Boasberg fully appreciates the devastating economic ripple effect this decision could have on our state’s economy,” said WDEA President Shannon Holter. “The financial consequences would extend far beyond the pipeline company and the oil shippers who use it.”
“Our member communities are already reeling from the drop in oil prices and the economic shutdown caused by the coronavirus,” Holter added. “This is another gut punch to the industry, to royalty owners, to state and local government, to our schools, and even to ag producers if oil trains take up rail capacity during the fall harvest. The ripple effect would hit all segments of our economy.”
Click
here to read the WDEA news release.
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NDIC Dismisses Oil Waste Law Proceeding
The North Dakota Industrial Commission voted unanimously this week to dismiss its consideration of mandatory production cuts under a state law that requires regulators to determine if the state's oil and gas resources are being wasted.
The proceeding was triggered by the steep decline in oil prices triggered by the Saudi-Russian price war and falling demand related to the coronavirus pandemic. State law - Section
38-08-02(19) - required NDIC to decide if production of oil or gas in excess of transportation or marketing facilities or in excess of reasonable market demand constitutes waste.
The Department of Mineral Resources conducted a lengthy hearing in May to hear input from producers about the possibility of imposing production quotas to prevent waste. DMR Director Lynn Helms said only three of the 45 parties who provided testimony spoke in favor of the idea. Helms said two parties were neutral, and the other 40 were either mildly or strongly opposed to the idea.
It was 55 years ago the last time the NDIC conducted a hearing on the waste law. Helms said in 1965 there were only state and private leases, but nowadays the industry is much more complex so imposing pro-rated production cuts would be extraordinarily difficult.
Click
here to listen to Helms' comments.
Helms said even those who supported some form of production quota had differing points of view, suggesting that rather than across-the-board cuts, the state consider reductions based on contracts, available infrastructure or gas gathering fees.
Click
here to read reporter Amy Sisk's story about the decision in the Bismarck Tribune.
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Williston Basin Petroleum Conference
POSTPONED AGAIN: Moving to May 2021
The Williston Basin Petroleum Conference has been postponed until May 11-13, 2021. The conference was originally rescheduled for September 2020 from the original conference date in May 2020. The North Dakota Petroleum Council made the announcement this week citing continued travel restrictions around the country and the world related to the COVID-19 pandemic.
“We are committed to bringing the best value to our conference attendees and exhibitors, and selecting the right date to maximize attendance and participation is crucial to making this conference a success,” said Ron Ness, NDPC President. “While things are open and moving in North Dakota, we understand that our industry members across the country are still facing travel constraints. We are excited to host the Williston Basin Petroleum Conference next May, and looking forward to bringing our industry together.”
The conference has become the most important event for business development and networking in the oil and gas industry in North Dakota and the Rocky Mountain region. Organizers are working with experts to ensure a COVID-safe conference, including planning for social distancing, frequent sanitizing of high-touch areas, and daily temperature checks.
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Radical Ballot Measure Signatures Submitted
Petition Drive Funded Entirely by Out-of-State Money
The same group of activists who duped voters in 2018 into passage of a constitutional measure that jeopardizes the free speech rights of North Dakotans submitted petitions this week for a constitutional amendment that would significantly alter the state's election process.
The 1,500-word addition to the state constitution would radically change the state's voting procedure and the way legislative districts are drawn. The measure would create open primary elections, allowing voters to cross party lines to pick the weakest opponent for their preferred party candidate. It would also require that the four candidates receiving the most votes in the primary for the legislature and statewide office appear on the general election ballot for that office, effectively eliminating the primary in many cases, or possibly eliminating all candidates from a political party. It would also create "instant runoffs" by allowing voters to rank their first, second, third and fourth choices of the candidates for each office.
The measure would also throw out the state legislature's longstanding tradition of re-drawing legislative districts every 10 years to reflect population shifts, and instead grant that authority to the new Ethics Commission. The commission would be required to first establish senatorial districts, each of which would be divided into two legislative districts.
The ballot measure sponsoring committee calls itself
North Dakota Voters First, and is composed of many of the same individuals who pushed the confusing ethics measure two years. It's also financed the same way, with all of its
$187,000 in revenue coming from left-leaning out-of-state groups. The group submitted more than 36,000 signatures to Secretary of State Al Jaeger on Monday. A constitutional measure requires 26,904 signatures valid signatures to be placed on the November ballot.
Click
here to see members of the sponsoring committee and the full text of the measure.
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WDEA Pro-Coal Facebook Post Goes Semi-Viral
A Facebook post published by the Western Dakota Energy Association on the Fourth of July went semi-viral this week, and has been viewed by more than 46,000 Facebook users to date.
The post, which contained a pie chart of the current energy generation mix on the MISO grid, asked readers to "thank a coal miner and a power plant worker. Without them, your air conditioner would not be working." Wind resources available to the Midwest Independent System Operator were nearly non-existent on July 4, providing only about 1,300 megawatts of capacity at a time when MISO demand was close to 90,000 megawatts. Coal-fired generating plants were supplying nearly 44,000 megawatts of power to the grid, just under half the consumer demand. Natural gas plants supplied much of the rest.
Click
here to see the post, which has been shared by more than 400 Facebook users. Click
here to see WDEA's Facebook page.
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Transportation Alternative Awards
Williston, Watford City, Crosby and Beach Among Western Cities Awarded
Over $2 million in Transportation Alternatives funding was awarded this week to urban and rural projects across the state.
ND Department of Transportation Director Bill Panos announced the awards noting the TA funding is used for transportation improvement projects, and the grants are made possible through a federally funded program administered by the NDDOT.
“This program plays a key role in increasing safety and promoting healthy lifestyles through active transportation alternatives, which make North Dakota a better place to live and work,” said Panos.
The NDDOT awards projects each year in local communities to encourage active modes of transportation. Projects include pedestrian and bicycle facilities, Safe Routes to School projects, community improvement activities, and environmental mitigation projects.
Urban projects include:
- Williston – River and Park Accessibility Trail Connections – $74,860
- Minot – Edison Elementary School Safe Routes to School – $290,000
- Mandan – Old Red Trail Phase 2 – $168,237
- Bismarck – Bismarck Public Schools Safety Improvement – $27,516
- West Fargo – Drain 45 Multi-Use Path Phase 2 – $290,000
Rural projects include:
- Watford City/McKenzie County – 2nd Avenue SW Multi-Use Path – $200,000
- Crosby/Divide County – Multi-Use Path – $199,088
- Beach/Golden Valley County – 3rd Street SW Multi-Use Trail – $200,000
- Linton/Emmons County – ADA Ramps & Sidewalk Corridor – $182,129
- Milnor/Sargent County – Safe Walk to School – $200,000
- Horace/Cass County – County Road 17 Shared Use Path – $186,260
For more information on NDDOT’s Transportation Alternatives program, click
here.
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DOT Director Bill Panos Elected VP of WASHTO
North Dakota Department of Transportation Director Bill Panos was elected vice president of the Western Association of State Highway Department Officials (WASHTO). His term began on July 1.
WASHTO contributes to national policies on transportation issues that are responsive to member needs and advocates for legislation that supports efficient and effective transportation systems, economic competitiveness, and the environmental integrity of member states.
WASHTO membership includes departments of transportation from Alaska, Arizona, California, Colorado, Hawaii, Idaho, Kansas, Montana, New Mexico, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington and Wyoming.
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WDEA Offering Energy Scholarships
The Western Dakota Energy Association will award five $1,000 scholarships this fall to students in an energy-related field at a North Dakota college, university or technical school.
WDEA President Shannon Holter said the association is offering the scholarships to help the industry and western communities meet the workforce challenges historically experienced with oil industry growth.
“We recognize that North Dakota will see benefits from the oil industry only if it is able to attract the workforce it needs,” said Holter. “We want to do everything we can to encourage young people to explore the many opportunities for a rewarding career in the energy sector.”
Funding for the scholarship program is generated by sponsorships of WDEA’s annual meeting, as well as royalties from advertising in Basin Bits magazine.
Click
here to learn more about the selection criteria and how to apply.
Click
here to view or download an application form.
The application deadline is September 18, 2020. Scholarship winners will be announced at WDEA's annual meeting October 7-8 in Williston.
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Quick Connect
- DAPL clarifies suggestion it would defy order to shut down -- Fargo Forum
- Pending DAPL shutdown could mean extended well shut-ins -- S&P Global
- What’s at stake for N.D.’s economy if DAPL goes offline -- KXMB-TV
- Williston Mayor Klug details how shutdown could affect Bakken -- KFYR-TV
- Three pipeline setbacks in two days, pressure intensifies on Minnesota project -- Star Tribune
- Port: Democrat opposition to pipelines is why No. Dakota will vote for Trump -- Dickinson Press
- Several contractor employees at Tioga Gas Plant test positive for COVID -- KFYR-TV
- ND PSC fines Xcel Energy over wind farm missing tower lighting deadline -- Bismarck Tribune
- 2021 Legislature might discuss North Dakota voter registration -- Bismarck Tribune
- Economic Resiliency Grant from CARES Act helps businesses open safely -- KFYR-TV
- Burgum raises bar for unemployment in ND as COVID-19 cases mount -- Dickinson Press
- ND Lawmakers discuss concerns in bill draft for Legacy Fund earnings -- Bismarck Tribune
- Legacy Fund questions remain as the 2021 legislative session draws near -- KX News
- Meridian Energy faces final ND oil refinery hurdle – financing in a pandemic -- S&P Global
- President Trump declares disaster in North Dakota for spring flooding -- Bismarck Tribune
- Stark Co. Commission candidate may have been ineligible to run for office -- Dickinson Press
- Rainfall improves drought conditions in ND; soil condition improves -- Minot Daily News
- Tesla 'Superchargers' now operating in Bismarck and other ND cities -- Bismarck Tribune
- North Dakota schools to receive $419M from Common Schools Trust Fund -- Dickinson Press
- Minot community reacts to high school expansions with Cognizant purchase -- KFYR-TV
- School board touts education successes while developing long-term plans -- Hazen Star
- Duke and Dominion cancel long-delayed, $8B Atlantic Coast Pipeline -- Associated Press
- U.S. Supreme Court deals big blow to Keystone oil pipeline project -- Associated Press
- Activists applaud “huge victory” that halts pipelines killing thousands of jobs -- Energy In Depth
- Grim day for oil and gas pipelines show they're almost impossible to build -- Bloomberg News
- Biden will increase energy costs for Americans with 'carbon tax' on fossil fuels -- IER
- Renewable companies should have to disclose climate-related financial risks -- Heartland Inst.
- Climate thought police are demanding social media censor climate skeptics -- Master Resource
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Factoid of the Week
The Dakota Access Pipeline was approved by state and local regulatory agencies in all four states where the pipeline operates, as well as the U.S. Army Corps of Engineers. All told, more than 1,000 certificates, permits and approvals were granted for the 30-inch diameter pipeline. That's about one permit or approval for every mile of pipeline.
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July 14
Bismarck
July 15
Bismarck
July 16
Bismarck
July 21
Online via Microsoft Teams
July 22
Bismarck
July 23
Bismarck
July 30
Bismarck
August 4
Bismarck
August 20-21
Williston
September 1-3
(rescheduled for May 11-13, 2021)
Bismarck
September 30 - October 1
Bismarck
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Oil prices and rig count
July 10, 2020
WTI Crude: $40.55
Brent Crude: $43.24
Natural Gas: $1.81
North Dakota Active Oil Rigs:11 (unchg)
7/10/2019 -- 58 rigs
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Geoff Simon
Editor/Executive Director
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