Dakota Access Pipeline Construction Halted! ... Across 40 Miles, Temporarily

Researched by Industrial Info Resources (Sugar Land, Texas)--Last Friday, minutes after an injunction filed by the Standing Rock tribe was denied, the U.S. federal government stepped in and asked for another review of the federal permits for the 450,000-barrel-per-day (BBL/d) Dakota Access Pipeline, a project under the umbrella of Energy Transfer Partners (NYSE:ETP) (ETP) (Dallas, Texas). This has led to a call by the federal government for Dakota Access to voluntarily halt construction around federal lands, specifically for 20 miles east and west of Lake Oahe in North Dakota.

While this may sound like a death sentence for the project, it is already 60% complete. With production from the Bakken Shale declining alongside every other North American oil or gas play, shippers will not find themselves unduly burdened by its absence. Rather, the delay generated by these legal proceedings will present a higher burden to ETP itself through lost time and legal fees.

While Dakota Access has made news only recently due to the events in North Dakota, the pipeline as a whole has been under construction since late 2015, according to IIR's research. Further south in Illinois, Iowa, and South Dakota, the pipeline is still under construction, as are the six gathering terminals around northwest North Dakota that are to feed the pipeline. In fact, the project as a whole has been slated to be completed at the end of October, so crews have been working for some time along other sections of the pipeline. Construction progress aside, given the nature of regulatory permitting and legal issues, resolving this dispute and resuming construction in time to meet that completion date may prove a real challenge.

Nevertheless, production has been steadily declining across all the North American producing regions for months. The Bakken Shale, one of the most costly plays, is chronically under-served by pipeline infrastructure. However, with the Bakken's extensive rail network and subsequent ability to serve both coasts with light, sweet crude oil, utilizing a project like Dakota Access to get to the Gulf Coast and compete with the far-closer Eagle Ford Shale play's similar light, sweet crude is perhaps less than ideal for shippers. As such, the delay of Dakota Access may not prove a burden on producers as much as it will to ETP itself, which will have to go through the immediate legal proceedings on the table, and perhaps revisit its routing and designs to evaluate the possibility of re-routing a portion of the line. In short, DAPL will in all likelihood be delayed, and the one to suffer most will be ETP.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.