Appeals Court Allows Dakota Access Pipeline to Continue Operating -- 2nd Update
By Rebecca Elliott
A federal appeals court said the Dakota Access pipeline can
continue carrying oil for now, a win for pipeline operator Energy
Transfer LP and North Dakota oil producers.
The Wednesday decision by a three-judge panel for the U.S. Court
of Appeals for the D.C. Circuit effectively reverses a lower
court's order that the pipeline be emptied of crude by Aug. 5 and
remain shut down while the U.S. Army Corps of Engineers completes
an environmental-impact statement of the conduit's crossing under
Lake Oahe, a review expected to take 13 months.
Dakota Access has been carrying oil nearly 1,200 miles from
North Dakota to Illinois since 2017. As of earlier this year, it
transported nearly 40% of North Dakota's oil, according to East
Daley Capital Advisors Inc. But a federal judge ruled earlier this
year that the Army Corps didn't conduct a sufficient environmental
review before granting the pipeline an easement to cross Lake Oahe,
a reservoir on the Missouri River.
The appeals court said a lower court would consider arguments
about whether the pipeline should be emptied, but said it didn't
find immediate cause to do so. Meanwhile, the appeals court will
continue to review the pipeline and Army Corp's contention that an
additional environmental review isn't required.
Allowing the pipe to continue carrying oil helps not only Energy
Transfer and its partners -- Enbridge Inc., Phillips 66 and
Marathon Petroleum Corp. -- but also companies such as Marathon Oil
Corp. and Hess Corp. that produce oil in the region.
It has grown more difficult in recent years to build oil and gas
pipelines because of opposition from environmental groups, Native
American tribes and landowners. The builders of the $8 billion
Atlantic Coast Pipeline recently pulled the plug on the project,
which would have carried natural gas along the East Coast, while
the Keystone XL oil pipeline, proposed more than a decade ago,
still hasn't been built.
Energy Transfer General Counsel Thomas Mason said during the
company's second-quarter earnings call Wednesday that it is
confident Dakota Access will continue to operate and that
additional environmental review ultimately won't be required.
The value of Energy Transfer's shares increased roughly 3%
Wednesday, eclipsing a gain of around 1% in the price of U.S.
benchmark oil. The company reported second-quarter profits of $672
million, compared with $1.2 billion during the same period a year
The Standing Rock Sioux Tribe said it would continue to fight
"As the environmental review process gets under way in the
months ahead, we look forward to showing why the Dakota Access
Pipeline is too dangerous to operate," Mike Faith, the tribe's
chairman, said in a statement.
Dakota Access has helped facilitate the growth of the North
Dakota region's Bakken Shale boom. North Dakota oil output
increased around 40% from mid-2017, when the pipeline began
operating, through March, when the coronavirus pandemic took hold
in the U.S., Energy Information Administration data show.
The pipeline faces political risk even if it ultimately prevails
in court. The Army Corps said in an April court filing that it
expected to complete its environmental-impact statement by the
middle of next year. That means that if Democrat Joe Biden wins the
presidential election, his administration could have a say in the
"We think that a newly elected president would face strong
pressure to suspend the permits even if the D.C. Circuit does not,"
ClearView Energy Partners LLC analysts said in a recent note.
Mr. Biden's campaign didn't respond to requests for comment
about whether it would seek to pull the plug on Dakota Access. The
Army Corps declined to comment on whether it had begun the
environmental-review process or if the Trump administration's
overhaul of the National Environmental Policy Act affects its
Write to Rebecca Elliott at firstname.lastname@example.org
(END) Dow Jones Newswires
August 05, 2020 20:21 ET (00:21 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.