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Industryweek 12964 North Dakota Shale Pipeline

Dakota Access Pipeline Will Get Its Easement, Says Army

Feb. 7, 2017
The approval of the easement the company needs to complete work follows Trump’s memorandum that advised expediting review of the project.

The controversial Dakota Access pipeline is set to win the final go-ahead for completion after U.S. President Donald Trump asked for a speedy approval.

The U.S. Army said it will grant Energy Transfer Partners LP the easement it needs to finish the line that will ship almost half a million barrels of crude a day from North Dakota’s shale fields to refineries across the Midwest and on to the Gulf Coast.

The approval of the easement the company needs to complete work follows Trump’s memorandum that advised expediting review of the project. Trump took office promising to favor oil and natural gas developments as well as support new infrastructure, such as reviving TransCanada Corp.’s Keystone XL pipeline.

The move to allow completion of Dakota Access, after months of heated protests, is a blow to opponents who have argued the pipeline would damage sites culturally significant to Native Americans and pose an environmental hazard where it crosses the Missouri River. The 1,172-mile (1,886-kilometer) project is emblematic of the broader battle over new pipelines. The $3.8 billion line has been stalled since September when the Obama administration halted work to reconsider prior decisions to allow it.

Energy Transfer Partners surged on news of the impending approval. The stock was up as much as 0.8% on Tuesday after falling 1.5% earlier.

The Army also said its Corps of Engineers will no longer prepare an Environmental Impact Statement for the work to cross Lake Oahe in North Dakota--as President Barack Obama ordered before leaving office.

The project was originally scheduled to be operational by the end of 2016. Now it’s expected to start operating June 1, assuming no new obstacles prevent it, a person familiar with the matter said Feb. 3. Lisa Dillinger, a spokeswoman for Energy Transfer, confirmed that the project would be in service in the second quarter.

Energy Transfer and White House spokeswoman Kelly Love did not immediately respond to e-mail and phone requests seeking comment.

"Today’s announcement will allow for the final step, which is granting of the easement," Robert Speer, Acting Secretary of the Army, said in a statement. "Once that it done, we will have completed all the tasks in the Presidential Memorandum of January 24, 2017."

New Infrastructure

“Our nation needs new energy infrastructure, which means we must have a process to build safe, efficient and environmentally sound projects like pipelines and power lines," North Dakota Republican Senator John Hoeven said in a statement following a meeting with Speer. "Going forward, we need to review the permitting process to ensure that everyone has an opportunity to be heard and that a fair, certain, and legal process has been followed."

The Army is expected to formally grant the easement tomorrow, North Dakota Republican Congressman Kevin Cramer said in a statement. "After months of unnecessary delay, the Missouri River easement for the Dakota Access Pipeline is being issued by the Army Corps of Engineers."

The pipeline could help cut costs for drillers in North Dakota’s Bakken shale play as the U.S. oil industry recovers from the worst rout in a generation. Producers in the region--which hasn’t rebounded as quickly as more profitable plays like the Permian Basin in Texas--have turned to more costly rail shipments when existing pipes filled up. Dakota Access, with a capacity of about 470,000 barrels a day, would ship about half of the current Bakken crude production.

Energy Transfer owns the project with Phillips 66 and Sunoco Logistics Partners LP. Marathon Petroleum Corp. and Enbridge Energy Partners LP announced a venture in August that would also take a minority stake in the pipeline.

District Court

The Justice Department filing comes one day after a government lawyer told U.S. District Judge James Boasberg in Washington that a decision on whether to grant Dakota Access permission to cross the lake would be made by the end of this week.

Boasberg has been presiding over a lawsuit filed by two Sioux Indian tribes last year, objecting to the pipeline’s path across lands they consider sacred. After the judge rejected the Sioux bid for an order putting pipeline construction on hold for their suit, the Obama administration paused the project for further review and later said it would assess its environmental impact.

That action prompted the pipeline company to ask Boasberg for a ruling that it had met all the requirements for permission to cross the lake and that the Corps could not continue to withhold it.

“The Obama administration correctly found that the Tribe’s treaty rights needed to be respected, and that the easement should not be granted without further review and consideration of alternative crossing locations,” Standing Rock Sioux lawyer Jan Hasselman said in an e-mailed statement. “Trump’s reversal of that decision continues a historic pattern of broken promises to Indian Tribes and violation of Treaty rights. They will be held accountable in court.”

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