• 20 mins Syrian Rebels Relinquish Control Of Major Gas Field
  • 1 hour Schlumberger Warns Of Moderating Investment In North America
  • 2 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 5 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 6 hours New Video Game Targets Oil Infrastructure
  • 8 hours Shell Restarts Bonny Light Exports
  • 9 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 15 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 20 hours British Utility Companies Brace For Major Reforms
  • 1 day Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 1 day Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 1 day Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 day OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 1 day London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 day Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
Alt Text

Rising OPEC Production Weighs On Oil Prices

After seeing a slight drop…

Alt Text

Saudi Arabia Looks To Shelve Aramco IPO

Saudi sources have confirmed that…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Bakken Oil Patch At Risk Over Pipeline Lawsuits

Bakken Pipeline

One of the key factors in the survival of the Bakken oil patch in the future will be affordable transportation options. Bakken producers receive lower realized prices for their output due to the transportation costs associated with moving the product as well as the difficulty in storing it. This issue has been a persistent problem for years, but crude by rail has helped make the issue less problematic over time. Pipelines are the next step for the Bakken if it is to become a sustainable long-term oil producing area.

Yet putting in a simple pipeline may be more difficult than it appears - a state of affairs that may jeopardize the long run feasibility of shale production in North Dakota. The pertinent example here is TransCanada and its Keystone XL pipeline. TransCanada ran into an unjustified level of hostility towards its pipeline. Opponents and proponents in that debate both widely inflated claims about either the costs or benefits of the pipeline. Keystone XL would have had a modest positive economic impact on the U.S., and it would have made it mildly easier for the Canadians to ship crude. Environmentalists acted as though Keystone XL would spill millions of gallons of oil daily and wreck the ecosystem forever while proponents loudly proclaimed the pipeline the answer to a stagnant U.S. economy. Both groups exaggerated greatly. Related: BP Faces Setback In World’s Largest Unexplored Oil Basin

The same situation is starting to play out in Iowa.

Energy Transfer Partners is looking to build a pipeline that connects the Bakken to a distribution hub at Pakota, Illinois. The route crosses a 346-mile stretch of Iowa and would require that Energy Transfer Partners subsidiary, Dakota Access, which is building the pipeline, buy land from nearly 1,300 different property owners.

This type of situation is particularly difficult since the refusal of a single landowner to sell a right of way on their property can make the project unfeasible. Given that level of negotiating power, landowners can often demand huge sums for their property right of way. In situations like this, eminent domain exists to help the State push projects through. Since Dakota Access is not a State sanction utility, it’s unclear if the company can use eminent domain in the circumstances. Several property owners are suing for the right to refuse to sell a right of way to the pipeline. It’s unclear at this stage if the property owners oppose the pipeline personally or if they are simply looking for an above market payout for their right of way. In either case, the suit has the potential to impact the Bakken’s future. Related: The Biggest Winner Of The Oil Bust: Interview With Aeromexico

The $3.8 billion pipeline is facing a few other hurdles as well of course, but the eminent domain lawsuit is emblematic of the situation that affects so many major projects across the U.S. Many developments today face significant hurdles from a small minority that opposes the project for a variety of personal reasons. In some cases, projects like Keystone XL are opposed on environmental grounds, but in other cases even renewable energy projects like offshore wind farms or desert solar farms can run into trouble.

There are few easy solutions to these types of issues, given the competing needs of economic efficiency and individual rights, but it is clear that they are reducing economic competiveness and growth at a time when the country needs both.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News