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Released July 08, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--July is turning out to be a bad month for President Donald Trump's goal of achieving energy dominance. One day after the owners of the Atlantic Coast Pipeline abandoned their project following adverse federal court rulings, separate federal courts ordered one operating crude oil pipeline to stop transporting oil while another court ruled against the Keystone XL pipeline in its long-running legal effort to build a 1,200-mile crude-oil pipeline connecting Hardisty, Alberta, to Steele City, Nebraska. If constructed, the $8 billion Keystone XL pipeline would transport up to 830,000 barrels of crude oil per day.
For more on the decision to terminate the Atlantic Coast Pipeline project, see July 7, 2020, article - Dominion Energy Strategically Repositions After Terminating Atlantic Coast Pipeline Project.
On Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia ordered the 1,172-mile Dakota Access Pipeline (DAPL), majority-owned by Energy Transfer Partners L.P. (NYSE:ETP) (Dallas, Texas), to stop operating by August 5. The pipeline, operating since 2017, transports about 450,000 barrels of crude per day from North Dakota to Illinois. Legal experts said this was the first time a judge ordered an operating pipeline to suspend operations.
The D.C. court's ruling is the latest twist in a long-running legal and public relations battle over DAPL. The Monday ruling held that the permits granted to DAPL didn't fully comply with the requirements of the National Environmental Policy Act (NEPA). Boasberg ordered a more extensive environmental impact review, which could stretch into 2021.
In his opinion, Boasberg wrote that the court was "mindful of the disruption such a shutdown will cause" but that it had to consider the "potential harm each day the pipeline operates."
Energy Transfer issued this statement: "We believe that the ruling ... is not supported by the law or the facts of the case. Furthermore, we believe that Judge Boasberg has exceeded his authority in ordering the shutdown of the Dakota Access Pipeline, which has been safely operating for more than three years. We will be immediately pursuing all available legal and administrative processes and are confident that once the law and full record are fully considered Dakota Access Pipeline will not be shut down and that oil will continue to flow."
Early in his first year as president, Trump ordered both projects to proceed. DAPL was built, but Keystone XL never was, and it remains ensnared in a welter of litigation and regulatory decisions that have mostly gone against the project developer, TC Energy Corporation (NYSE:TRP) (Calgary, Alberta), formerly known as TransCanada Corporation. For more on President Trump's executive order, see January 31, 2017, article - Trump Orders Benefit KXL, DAPL and Other 'High Priority' Infrastructure Projects.
Analysts said the death of the Atlantic Coast Pipeline, plus the cancellation earlier this year of the controversial the Constitution Pipeline, cast a dark shadow over other controversial proposed pipeline projects, including the $4.7-billion Mountain Valley Pipeline being developed by a unit of EQT Corporation (NYSE:EQT) (Pittsburgh, Pennsylvania). Energy company Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) is trying to build two crude-oil pipeline projects, Line 3 and Line 5, but those remain entangled in legal and regulatory cases. In addition, several proposed pipelines in Texas have been stalled over disputes with landowners and questions about market demand.
It was with the goal of expediting energy infrastructure project construction that the Environmental Protection Agency (EPA), acting under a prior executive order from Trump, on June 1 finalized changes to the Clean Water Act that would sharply limit states' and tribes' ability to block construction of infrastructure projects. For more on that, see June 16, 2020, article - Clean Water Act Changes Aim to Speed Energy Projects, but May Delay Them Instead. It is unclear how the EPA changes could affect that fate of the DAPL and Keystone XL pipelines.
In the Keystone XL case, the U.S. Supreme Court on Monday rejected a Trump administration request to allow construction of parts of the Keystone XL Pipeline. Justice Elena Kagan partially lifted the stay on proposed pipeline projects imposed this spring by a federal judge in Montana, but specifically denied Keystone XL's request to move forward. The Montana judge had issued a nationwide suspension of all proposed pipelines in the U.S. that had permits issued by the U.S. Army Corps of Engineers under what is known as Nationwide Permit 12 program.
Keystone XL developer TC Energy said the Supreme Court ruling would delay almost all project construction until 2021. That pipeline project was originally proposed in 2008 and was expected to be operating by early 2012. Delays have driven up the cost of the project to an estimated $8 billion.
Paul Afonso, chief legal officer and senior vice president at the American Petroleum Institute (APIU) (Washington, D.C.), made this comment on the Supreme Court's decision: "The highest court has reinstated Nationwide Permit 12, and for good reason -- pipelines are the backbone of America's energy infrastructure and the safest way to deliver affordable, reliable and cleaner energy to communities across the country. This is a significant step toward restoring more certainty for energy companies, but declining to revive the permit for Keystone XL is short-sighted as the project has already been thoroughly reviewed for well over a decade. As this case moves forward, we will urge the U.S. Court of Appeals for the Ninth Circuit to reinstate the permit for all pipeline projects, including Keystone XL."
"This has been a difficult week for pipelines, energy consumers and the environment," commented Jesus Davis, Industrial Info's North American specialist for the Oil & Gas < a href="https://www.industrialinfo.com/database/production/" target="_blank">Production, Pipelines and Terminals industries. "If the Atlantic Coast Pipeline is not going to get built, who will supply the planned gas-fired power plants in Virginia and North Carolina? Solar power and wind power can't completely replace the generating capacity of coal plants that plan to retire. So maybe some of those coal-fired plants stay open? That can't be good or the environment."
"And the suspension of the DAPL means Bakken crude oil producers have one less vehicle to get their product to market," Davis continued. "They may have to turn to crude-by-rail, which is far more expensive than pipeline shipping. Plus, crude by rail has more safety risks as well as environmental risks. So, in a best-case scenario, consumers in the Midwest end up paying higher prices at the pump."
"And the Supreme Court's decision to reinstate the Nationwide Permit 12 program for most affected pipeline projects is good news, but further litigation of the Montana court's original decision means developers must await the other shoe dropping," Davis said. "Meanwhile, the Keystone XL project continues to twist in the legal and regulatory wind."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
For more on the decision to terminate the Atlantic Coast Pipeline project, see July 7, 2020, article - Dominion Energy Strategically Repositions After Terminating Atlantic Coast Pipeline Project.
On Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia ordered the 1,172-mile Dakota Access Pipeline (DAPL), majority-owned by Energy Transfer Partners L.P. (NYSE:ETP) (Dallas, Texas), to stop operating by August 5. The pipeline, operating since 2017, transports about 450,000 barrels of crude per day from North Dakota to Illinois. Legal experts said this was the first time a judge ordered an operating pipeline to suspend operations.
The D.C. court's ruling is the latest twist in a long-running legal and public relations battle over DAPL. The Monday ruling held that the permits granted to DAPL didn't fully comply with the requirements of the National Environmental Policy Act (NEPA). Boasberg ordered a more extensive environmental impact review, which could stretch into 2021.
In his opinion, Boasberg wrote that the court was "mindful of the disruption such a shutdown will cause" but that it had to consider the "potential harm each day the pipeline operates."
Energy Transfer issued this statement: "We believe that the ruling ... is not supported by the law or the facts of the case. Furthermore, we believe that Judge Boasberg has exceeded his authority in ordering the shutdown of the Dakota Access Pipeline, which has been safely operating for more than three years. We will be immediately pursuing all available legal and administrative processes and are confident that once the law and full record are fully considered Dakota Access Pipeline will not be shut down and that oil will continue to flow."
Early in his first year as president, Trump ordered both projects to proceed. DAPL was built, but Keystone XL never was, and it remains ensnared in a welter of litigation and regulatory decisions that have mostly gone against the project developer, TC Energy Corporation (NYSE:TRP) (Calgary, Alberta), formerly known as TransCanada Corporation. For more on President Trump's executive order, see January 31, 2017, article - Trump Orders Benefit KXL, DAPL and Other 'High Priority' Infrastructure Projects.
Analysts said the death of the Atlantic Coast Pipeline, plus the cancellation earlier this year of the controversial the Constitution Pipeline, cast a dark shadow over other controversial proposed pipeline projects, including the $4.7-billion Mountain Valley Pipeline being developed by a unit of EQT Corporation (NYSE:EQT) (Pittsburgh, Pennsylvania). Energy company Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta) is trying to build two crude-oil pipeline projects, Line 3 and Line 5, but those remain entangled in legal and regulatory cases. In addition, several proposed pipelines in Texas have been stalled over disputes with landowners and questions about market demand.
It was with the goal of expediting energy infrastructure project construction that the Environmental Protection Agency (EPA), acting under a prior executive order from Trump, on June 1 finalized changes to the Clean Water Act that would sharply limit states' and tribes' ability to block construction of infrastructure projects. For more on that, see June 16, 2020, article - Clean Water Act Changes Aim to Speed Energy Projects, but May Delay Them Instead. It is unclear how the EPA changes could affect that fate of the DAPL and Keystone XL pipelines.
In the Keystone XL case, the U.S. Supreme Court on Monday rejected a Trump administration request to allow construction of parts of the Keystone XL Pipeline. Justice Elena Kagan partially lifted the stay on proposed pipeline projects imposed this spring by a federal judge in Montana, but specifically denied Keystone XL's request to move forward. The Montana judge had issued a nationwide suspension of all proposed pipelines in the U.S. that had permits issued by the U.S. Army Corps of Engineers under what is known as Nationwide Permit 12 program.
Keystone XL developer TC Energy said the Supreme Court ruling would delay almost all project construction until 2021. That pipeline project was originally proposed in 2008 and was expected to be operating by early 2012. Delays have driven up the cost of the project to an estimated $8 billion.
Paul Afonso, chief legal officer and senior vice president at the American Petroleum Institute (APIU) (Washington, D.C.), made this comment on the Supreme Court's decision: "The highest court has reinstated Nationwide Permit 12, and for good reason -- pipelines are the backbone of America's energy infrastructure and the safest way to deliver affordable, reliable and cleaner energy to communities across the country. This is a significant step toward restoring more certainty for energy companies, but declining to revive the permit for Keystone XL is short-sighted as the project has already been thoroughly reviewed for well over a decade. As this case moves forward, we will urge the U.S. Court of Appeals for the Ninth Circuit to reinstate the permit for all pipeline projects, including Keystone XL."
"This has been a difficult week for pipelines, energy consumers and the environment," commented Jesus Davis, Industrial Info's North American specialist for the Oil & Gas < a href="https://www.industrialinfo.com/database/production/" target="_blank">Production, Pipelines and Terminals industries. "If the Atlantic Coast Pipeline is not going to get built, who will supply the planned gas-fired power plants in Virginia and North Carolina? Solar power and wind power can't completely replace the generating capacity of coal plants that plan to retire. So maybe some of those coal-fired plants stay open? That can't be good or the environment."
"And the suspension of the DAPL means Bakken crude oil producers have one less vehicle to get their product to market," Davis continued. "They may have to turn to crude-by-rail, which is far more expensive than pipeline shipping. Plus, crude by rail has more safety risks as well as environmental risks. So, in a best-case scenario, consumers in the Midwest end up paying higher prices at the pump."
"And the Supreme Court's decision to reinstate the Nationwide Permit 12 program for most affected pipeline projects is good news, but further litigation of the Montana court's original decision means developers must await the other shoe dropping," Davis said. "Meanwhile, the Keystone XL project continues to twist in the legal and regulatory wind."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.
