This week was an ugly one for American shale: Several pipeline projects--both those existing and in the works--took severe hits that will have a profound effect on the shale industry going forward, the severity of which cannot be overstated.
The first hit was to Energy Transfer Partners’ already in service Dakota Access Pipeline, which a federal judge ordered must be emptied and shut by August 5. So far, ETP is conducting business as usual despite the order and has promised to appeal the decision. But this significant ruling will surely disrupt the entire oil industry in the Bakken shale.
North Dakota has ramped up production in recent years, and DAPL has supported this growth by carrying its light oil to market. If ETP’s appeals are unsuccessful, it could halt the flow of oil out of the Bakken in its tracks, and consequently shutter production in the area. Oil by rail was the mode of choice in the Bakken prior to DAPL, but now, the economics of oil by rail with WTI at $40 just isn’t there. What has served as the backbone of North Dakota’s oil success is now jeopardizing the entire industry in the area, and could do so well into next year.
As if that wasn’t enough, work on the in-progress Atlantic Coast Gas Pipeline has been halted after Dominion and Duke quashed the project that would have brought cheap natural gas to the Appalachian region citing cost issues, repeated delays, and “legal uncertainties”.…
This week was an ugly one for American shale: Several pipeline projects--both those existing and in the works--took severe hits that will have a profound effect on the shale industry going forward, the severity of which cannot be overstated.
The first hit was to Energy Transfer Partners’ already in service Dakota Access Pipeline, which a federal judge ordered must be emptied and shut by August 5. So far, ETP is conducting business as usual despite the order and has promised to appeal the decision. But this significant ruling will surely disrupt the entire oil industry in the Bakken shale.
North Dakota has ramped up production in recent years, and DAPL has supported this growth by carrying its light oil to market. If ETP’s appeals are unsuccessful, it could halt the flow of oil out of the Bakken in its tracks, and consequently shutter production in the area. Oil by rail was the mode of choice in the Bakken prior to DAPL, but now, the economics of oil by rail with WTI at $40 just isn’t there. What has served as the backbone of North Dakota’s oil success is now jeopardizing the entire industry in the area, and could do so well into next year.
As if that wasn’t enough, work on the in-progress Atlantic Coast Gas Pipeline has been halted after Dominion and Duke quashed the project that would have brought cheap natural gas to the Appalachian region citing cost issues, repeated delays, and “legal uncertainties”. Those uncertainties, as evidenced by the goings-on of DAPL, are not just unfounded fears, but could be indicative of the unfriendly pipeline climate that has been brewing for years.
The third blow to fossil fuel pipelines this week affected the notorious Keystone XL, which a court ruled could not move forward while current legal matters are resolved. The ruling was part of a broader issue that involved multiple pipelines, and while the ruling was actually favorable to most pipelines, the Keystone XL was excluded. The ruling canceled permits for pipelines who had received Nationwide Permit 12, which simplifies the Clean Water Act permitting process. This is just the latest in a long list of setbacks for the project, which always seems to find a way to snap back.
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