Uncertainty over the Dakota Access Pipeline's future has oil producers in 'holding pattern'

The Dakota Access Pipeline is the major means used to transport oil produced in the Bakken region of North Dakota to an existing pipeline in Illinois which can take the oil to Texas and the Gulf of Mexico. Earlier this month a judge ordered the Dakota Access Pipeline to cease operating so that a new environmental review, which could take a year or more, could be conducted. Fortunately, the U.S. Court of Appears for the District of Columbia has issued a stay of that ruling, at least while the appeals court reviews it.

“The purpose of this administrative stay is to give the court sufficient opportunity to consider the emergency motion for stay and should not be construed in any way as a ruling on the merits of that motion,” the court said in the order…

North Dakota Republican U.S. Sen. Kevin Cramer hailed the order as “common sense.”

A decision from the appeals court could be coming soon but in the meantime, the uncertainty over the pipeline’s future has already put a damper on the return of oil production in Bakken shale region:

Oil producers in the Bakken, the second largest U.S. shale field, cut May output by about 500,000 barrels per day after U.S. prices tumbled in March on the heels of global coronavirus shutdowns.

They were slowly restarting some wells when the court ruled the region’s main pipeline must face a new environmental review that could halt its operation for a year…

Producers will not be willing to commit to reopening closed wells or drilling news ones “unless they know more” on the pipeline’s future, said Nicholas O’Grady, chief executive officer at Northern Oil and Gas Inc, which has invested in about 7,000 wells in North Dakota’s Williston Basin…

“Right now, we just don’t have all the information. We are in a holding pattern,” said J.R. Reger, whose company Iron Oil suspended drilling and completing new Bakken wells in March.

The pipeline isn’t the only option for moving oil from the Bakken region south. Producers can ship the oil by rail, but the cost of doing so is $3 to $6 more per barrel. And with the price of oil currently already slightly below the break even point for producers tacking on additional costs doesn’t make sense. So for now, the region is in a holding pattern waiting to see what happens with the pipeline.

But that’s not the only threat oil producers are facing. Rep. Alexandria Ocasio-Cortez, who was one of the people protesting the Dakota Access Pipeline before she became a congresswoman, has proposed an amendment which, if passed, would prevent the Army Corps of Engineers from issuing permits for pipelines crossing waterways:

An amendment Ocasio-Cortez proposed for the next budget bill would prohibit the nation’s main infrastructure-building agency from using federal money to issue permits under the Section 404 of the Clean Water Act “for the discharge of dredged or fill material resulting from an activity to construct a pipeline for the transportation of oil or gas.”

That would prevent the Army Corps from constructing, repairing or working on roughly 8,000 projects per year involving oil and gas pipelines that cross waterways…

Ocasio-Cortez’s amendment could, in theory, prevent the Army Corps from issuing a new permit to restart the 570,000-barrel-per-day pipeline once it’s drained. The Army Corps’s website lists the Section 404 permit among those for which the court required verification.

We’ll see if this goes anywhere but at the moment the future of the pipeline is in doubt and that is already having real consequences for the oil field it serves. Here’s a video published by Time about AOC’s trip to the Standing Rock protest camp and how it influenced her brand of far-left politics.