Energy Transfer Partners Seeks Court Ruling on Dakota Access Pipeline -- Update

By Christopher Matthews

Energy Transfer Partners LP, the company behind the embattled Dakota Access pipeline, is continuing to pursue a court challenge to force the Obama administration to approve completion of the project instead of counting on a better reception from Donald Trump.

A day after the Obama administration put the brakes on the nearly 1,200 mile oil pipeline by denying a permit needed to finish the route, a spokesman for Mr. Trump said Monday that the incoming administration supports completing it.

But instead of waiting until the president-elect takes office next month, Dallas-based Energy Transfer Partners is pressing ahead with a request to a federal judge to allow the company to immediately cross beneath a Missouri River reservoir, the final 1,100-foot link to be built in the pipeline.

Analysts say Energy Transfer Partners has two potential reasons to seek a faster resolution: It is losing millions of dollars due to delays, and a longer wait could scuttle a $2 billion deal to sell a stake in the pipeline.

Lawyers for Energy Transfer Partners asked U.S. District Judge James Boasberg for an expedited ruling late Monday that would allow the company to complete the project. The delays have already cost the company $450 million, the company said in court papers filed in U.S. District Court in Washington, DC.

A hearing in the case is scheduled for Friday morning in Washington, D.C.

A spokeswoman for the company didn't immediately respond to a request for comment Tuesday.

The company's lawyers argued Monday that the Army Corps of Engineers had already approved the reservoir crossing, and that the final, needed approval -- an easement -- is nothing more than a perfunctory "ministerial" document. The delays amount to political interference and aren't supported by the law, they argued.

The Standing Rock Sioux tribe, which has garnered international attention for its monthslong protest of the pipeline, has asked the court to halt the project, arguing the reservoir crossing could contaminate their water supply, which is 70 miles downstream from the project.

Aside from the hundreds of millions of dollars Energy Transfer has already lost, further delays of the project could also scuttle a deal to sell roughly half its stake in the pipeline.

Energy Transfer and Sunoco Logistics Partners LP, which is also building the pipeline, reached a $2 billion deal in August to sell a minority stake in the pipeline to Enbridge Inc. and Marathon Petroleum Corp.

But under the deal's provisions, Enbridge and Marathon can walk away from the deal in early January if the Army Corps of Engineers hasn't released the project, according to securities filings.

"Closing of the investment transaction is subject to a number of conditions, not all of which have been met at this time," an Enbridge spokesman said. "We're working with our potential partners to understand the implications of recent developments on the transaction."

A Marathon spokesman didn't immediately respond to a request for comment.

The protests have become a major headache for the Energy Transfer Partners and Sunoco, both part of the web of pipeline companies run by billionaire Kelcy Warren.

Native American activists and other protesters have been gathering near the project site since August and have seen their numbers swell in recent days with the arrival of hundreds of U.S. military veterans, garnering blanket media coverage.

Dave Archambault II, chairman of the Standing Rock Sioux, said Monday that it was time for the protesters to leave, citing both their recent win against construction of the pipeline and harsh winter conditions.

But Energy Transfer has given little consideration to waiting out the protesters, according to a person familiar with company's thinking. Digging under the reservoir is a significant undertaking, which could take as many as 90 days, and the company wants to avoid further losses, the person said.

Write to Christopher Matthews at christopher.matthews@wsj.com

(END) Dow Jones Newswires

December 06, 2016 16:09 ET (21:09 GMT)

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