Oil market latest pressure for Dakota Access pipeline

Companies behind the controversial pipeline pressing their case in the U.S. court system.

By Daniel J. Graeber

CLEVELAND, Nov. 16 (UPI) -- There are concerns about how exposed the Dakota Access oil pipeline is to financial risk in the energy market, a group with ties to climate research said.

Energy Transfer Partners, one of the main companies behind the $3.7 billion pipeline, filed a legal challenge against alleged "political interference" in the project. With nationwide protests against the project mounting, the company said more delays that followed a lengthy review process were contrary to the rule of law.


"Dakota Access Pipeline has been granted every permit, approval, certificate, and right-of-way needed for the pipeline's construction," Energy Transfer Partners CEO Kelcy Warren said in a statement.

With only a few hundred feet left in construction, the U.S. Army Corps of Engineers ordered a halt to the process to take time for "additional discussion and analysis" of the potential threat to the interests of the Sioux tribe and area waters.

The last few hundred feet of construction requires drilling under the Missouri River. Outside of the environmental and tribal concerns, the Institute for Energy Economics and Financial Analysis said there were concerns about the economic risks for the project.


According to the IEEFA, if the pipeline isn't completed by Jan. 1, the project consortium may have to revisit some of the contracts for shipping oil through the 1,110-mile pipeline. The institute said further that crude oil prices being about 50 percent lower than they were at the height of the U.S. shale era means the regional economic prospects are far from certain.

"If oil prices remain low and Bakken oil production continues to collapse, pipeline capacity will quickly become superfluous," Clark Williams-Derry, a co-author of the report published by the IEEFA, said in a statement. "The Bakken oil industry has already over-invested in infrastructure for moving oil, and the Dakota Access Pipeline could simply add to the glut."

Enbridge Energy, which is party to North Dakota pipeline infrastructure, in September said regional crude oil production was too low to support the development of the planned east-bound Sandpiper pipeline. The company in its latest quarterly results said most of its existing pipeline networks were oversubscribed.

The Dakota Access pipeline could carry as much as half of what North Dakota produces and the pipeline consortium said that would reduce shipment by rail, which carries its own risks. At least 40 people were killed in Lac-Megantic, Quebec, in the 2013 derailment of a train carrying tankers of crude oil from North Dakota to Canadian refineries.


The IEEFA in the past received grant money from the Rockefeller Family Foundation, which since 2006 has focused almost exclusively on climate change.

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