U.S. District Judge Orders Shutdown of Dakota Access Pipeline

July 10, 2020July 28th, 2020
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Update 7/14/2020: Appeals court issues stay, allowing DAPL to continue operations, for now. *** Previous: Dakota Access Pipeline (DAPL) must shut down indefinitely after losing a key permit. On July 6, District of Columbia Judge James Boasberg vacated a long-standing permit that had allowed DAPL  to cross the Missouri River at Lake Oahu in North Dakota. The ruling was a surprise to some as the pipeline has been in operation since 2017. But Energy Transfer, the pipe’s owner, says it does not intend to stop operations.

DAPL’s Future Uncertain; Deeper Bakken Price Discounts Possible. Read AEGIS analysis here.

The judge ruled that the Army Corps of Engineers’ deficiency in granting the easements “outweighs the negative effects of halting the oil flow” for the 13 months that the Corps said it would need to conduct an extensive environmental impact study (EIS).

“We believe the ruling from Judge Boasberg is not supported by the law or the facts of the case,” Energy Transfer said. “We also believe that the Army Corps of Engineers has the ultimate jurisdiction over this matter, pursuant to its regulations governing Corps property.”

A prominent industry also weighed in on unintended effects. “Shutting down the pipeline will have a greater negative impact on safety than any environmental benefit the court is claiming to gain, putting more trucks on our roads, and more rail cars on the tracks, nearly 900 railcars per day,” said Ron Ness, President of the North Dakota Petroleum Council.

Energy Transfer, the owner of DAPL, quickly filed a motion to stay the decision along with an expedited appeal with the Court of Appeals, but was denied. Its response was to assert the judge did not have authority to issue the order and suggested it would not comply.

Energy Transfer said Boasberg exceeded his authority and does not have the jurisdiction to shut down the pipeline or stop the flow of crude oil.

Rapidan Energy Group estimates the shutdown of DAPL to last at least 10 to 12 months if Trump wins reelection – or become permanent if he loses.

The Dakota Access Pipeline is a 1,172-mile 30-inch pipeline that transports light-sweet crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois.

Source: Energy Transfer

DAPL throughput had averaged near its nameplate capacity of 570 MBbl/d before COVID-19, over one-third of the Bakkens total production in 1Q2020.

We continue to monitor oil, gas, NGLs, and regional markets for hedging opportunities. To learn more and see AEGIS opinion and recommendations, go to AEGIS View publications, or contact info@aegis-energy.com. Like what you see? Share this article with the button on the bottom right of your desktop. Market questions or comments? Contact us at view@aegis-energy.com

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