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Breaking News:

Surprise Crude Build Caps Oil Prices

Another Major Bakken Pipeline Forced To Halt Operations

The high-profile case of the Dakota Access oil pipeline ordered shut earlier this month has overshadowed another legal dispute over a smaller pipeline carrying crude out of the Bakken shale basin in North Dakota, which was also ordered shut, potentially stalling a recovery in the Bakken.

The Tesoro High Plains Pipeline was also ordered shut in early July, after 67 years of operations, by the U.S. Interior Department’s Bureau of Indian Affairs for trespassing on land owned by Native Americans.

The U.S. Interior Department’s Bureau of Indian Affairs preempted a mediation meeting set for August and served a formal notification of trespass to Tesoro officials, Jodi Rave, who owns undivided interest in two tracts of land on which Tesoro runs its pipeline, wrote in Grand Forks Herald earlier this month.

The right-of-way for the Tesoro High Plains to cross 90 acres of the Fort Berthold Reservation was first initiated in 1953 and was renewed every 20 years, in 1973 and in 1993, court documents reviewed by Bloomberg show. But in 2013, the then owner of the pipeline, Andeavor, acquired by Marathon Petroleum in 2018, failed to secure the right of way for the pipeline.

The Bureau of Indian Affairs ordered Marathon Petroleum to pay US$187 million in trespass damages and gave the company 30 days to appeal the decision.

This is the second oil pipeline ordered shut in North Dakota, after a federal judge ruled on July 6 that the Dakota Access Pipeline, in operation since 2017, must be emptied and shut down within 30 days, by August 5, until a new comprehensive environmental review is completed.

Last week, a U.S. Appeals Court ruled that Dakota Access can continue to operate while the court considers whether the pipeline should be shut down as ordered by a lower court’s ruling. 

If the two pipelines – which carry over one-third of the oil pumped in the Bakken as per Bloomberg estimates – were to shut down, they would make life much harder for Bakken shale drillers which may have to contend with higher shipping costs via rail or trucks while oil prices continue to languish in below-profit-making territory for the average well in the region.

By Tsvetana Paraskova for Oilprice.com

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  • Maxander on July 21 2020 said:
    That means around 300,000 bpd shale oil production cut from Bakken region of North Dakota will be seen ahead.
    Bakken region produces around 1 mn bpd of crude oil.
    & when one third of that wont be transported then producers will have to cut down production.

    America is already facing challenges in controlling rising crude oil inventories due to high production from several years.
    In that case, I dont think some drop in shale oil ( which is already minting loss due to low crude oil prices) production from a region would matter much to America at macro level.

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