Thought Piece

[Below, please find two stories that effectively announce a new era without being all that much different than the old era. Oil and natural gas will continue to flow from North Dakota to the outside world, just as it has always done. The Courts have given their final approval to the Dakota Access Pipe Line, with pipeline expected to start flowing at full capacity tomorrow or the next day.

In the meantime, the railroad oil shipping industry continues to upgrade its infrastructure and move commodities like coal, grain, and oil. Just like yesterday!

One small takeaway is that the cost of transporting one barrel of oil will continue to fall: $10 a barrel by rail and $6.00 a barrel by pipe line. The other benefit of the modern pipe line, in general, is transportation safety, whose importance was highlighted by Lac-Megantic rail disaster of 2013 Canada. As many as 50 people died and more than 30 downtown buildings were destroyed in that accident.

Like many “new eras,” the opening of the Dakota Access Pipe Line will quietly become just another advancement in US economic development.  Steve

P.S. Will someone in marketing or communications come up for a better name for this important project? It’s too important to be cursed with the mundane DAPL or the Dakota Access Pipe Line.]

Appeals court refuses to stop oil in Dakota Access pipeline

By The Associated Press

BISMARCK, N.D. — Mar 18, 2017, 4:01 PM ET

An appeals court on Saturday refused a request from two American Indian tribes for an “emergency” order that would prevent oil from flowing through Dakota Access pipeline.

The decision by the U.S. Court of Appeals for the District of Columbia Circuit means the $3.8 billion pipeline to move North Dakota oil to a distribution point in Illinois could be operating as early as Monday, even as the tribes’ lawsuit challenging the project moves forward.

The Standing Rock and Cheyenne River Sioux tribes have challenged an earlier ruling by U.S. District Judge James Boasberg not to stop final construction of the pipeline, and they wanted the appeals court to halt any oil flow until that’s resolved.

The appeals court said the tribes hadn’t met “the stringent requirements” for such an order.

The tribes had asked Boasberg to direct the Army Corps of Engineers to withdraw permission for Dallas-based developer Energy Transfer Partners to lay pipe under Lake Oahe in North Dakota, which the Corps manages for the U.S. government. The stretch under the Missouri River reservoir is the last piece of construction for the pipeline.

The company is wrapping up pipe work under the lake and has said oil could start flowing between Monday and Wednesday.

The tribes fear the pipeline could harm their water supply and their right to practice their religion, which relies on clean water. ETP disputes that.

The tribes’ appeal rests on the religion argument. Boasberg has said he doesn’t think the tribes have a strong case on appeal. He also said ETP would be “substantially harmed” by a delay in pipeline operations.


Dakota Access oil pipeline doesn’t faze big rail shippers

by: BLAKE NICHOLSON, Associated Press Updated: Mar 8, 2017 – 4:02 PM

BISMARCK, N.D. (AP) – The two biggest railroads shipping oil from North Dakota don’t seem particularly concerned that the Dakota Access pipeline may be about to come online, as oil makes up only a small percentage of their business in the state.

The pipeline could begin operating as soon as next week, despite an unresolved legal dispute involving two Native American tribes seeking to shut it down. At capacity, it will be able to transport half of the oil production of North Dakota, the nation’s No. 2-producing state behind Texas.

That isn’t likely to be a big concern for the state’s dominant rail shippers, BNSF Railway and Canadian Pacific Railway, which ship more coal and commodities such as grain than crude.

The pipeline’s developer, Texas-based Energy Transfer Partners, said in court documents last year that it has long-term transportation contracts with nine companies that want to ship oil through the pipeline.

“We think it’s going to be substantial,” said Ron Ness, president of the North Dakota Petroleum Council, a trade group representing nearly 500 energy companies. “It’s going to move a lot of barrels from western North Dakota.”

The pipeline could move enough oil to fill 500 or more rail cars each day, according to ETP. It is generally cheaper to move oil by pipeline than by rail, though it is still profitable to move it by rail, according to John Duff, operations research analyst with the U.S. Energy Information Administration.

Currently, it costs about $6 per barrel to ship by pipeline and about $10 per barrel to ship by rail, according to Justin Kringstad, director of the North Dakota Pipeline Authority.

BNSF Railway shipped more than 426,000 carloads of products from North Dakota last year – about half of which contained coal or grain – and “overall, crude oil never made up more than 5 percent of the total volume on our railroad,” spokeswoman Amy McBeth said.

BNSF has invested more than $1 billion in its network in North Dakota since 2013 and plans to pump another $80 million into it this year, according to McBeth.

“As this pipeline or any other is completed, we believe rail will always provide a valuable transportation option,” she said.

Crude shipments made up only 2 percent of total freight revenue last year for Canadian Pacific Railway, the other major rail shipper in North Dakota. Coal and grain totaled 26 percent. The company supplied the data but declined to comment on the pipeline.

ETP is finishing up construction and says oil could be flowing through the pipeline as early as next week. Once that happens, it will take about three weeks for it to reach Illinois, according to company spokeswoman Vicki Granado.

“The line will be considered fully operational once the crude reaches Patoka,” she said.

New pipelines typically can operate at full capacity immediately, according to Ness. Dakota Access is expected to carry nearly half a million barrels of crude daily. The most recent data available show that in January, North Dakota produced about double that amount.