FARGO — The timing couldn’t have been better for The Fargo Moorhead West Fargo Chamber of Commerce’s virtual Eggs & Issues program Tuesday morning, July 7.
A day after a federal judge ordered the Dakota Access Pipeline to shut down by Aug. 5, political and industry experts spoke at The Chamber’s webinar on the state of the oil industry. The event was scheduled before Monday’s DAPL news, but an extra 20 people signed up to tune into this specific panel, Chamber Board Chair Mark Nisbet said.
On Monday, July 6, U.S. District Judge James Boasberg wrote that the pipeline must be emptied of all oil within 30 days and will remain shut while the Army Corps of Engineers finishes an environmental review.
Sen. Kevin Cramer, R-N.D., said to not only shut down the DAPL, but drain it completely, was “absurd on its face.”
“It’s absurd both technologically as well as from a policy standpoint,” virtual panelist Cramer said. “... I believe that the judge has grossly outpaced his jurisdiction and his authority.”
The controversial pipeline, which crosses under the Missouri River near the Standing Rock Sioux Tribe’s reservation, can carry up to 570,000 barrels of crude oil per day. It currently moves roughly 40% of the Bakken’s daily production, said North Dakota Petroleum Council President Ron Ness.
North Dakota, the second-largest oil-producing state in the country, already suffers from typical transportation constraint price swings, Cramer said. The additional cost of transporting oil and getting it out of the ground in North Dakota creates a supply chain challenge, one that has been magnified as a result of COVID-19, Cramer said.
The economic activity related to the coronavirus pandemic has caused some dramatic declines in petroleum demand — overall about a 30% decrease, Cramer said. He added that the state may be in for a rough ride for a little while, but there’s also some good news on the horizon.
“Crude oil has made a modest recovery, but Bakken crude oil, which to the point of yesterday’s decision, continues to be less than that because of its market and transportation constraints,” Cramer added.
Though boardings on airplanes are still down — which make up a large part of the liquid fuel industry — as the economy climbs back up and demand rises, the state would see a lot more opportunity, Cramer said.
“But that opportunity will be lost to the Bakken should we not be able to get our oil to market, or if we have to pay an extra high price for rail, for example, to replace what would be lost in this Dakota Access Pipeline,” Cramer said.
The original pipeline project prompted protests from tribal members and climate activists in 2016 and 2017. Monday’s ruling by Boasberg on the 1,172-mile pipeline, which has been transporting crude oil since May 2017, was a win for environmental activists and Native American groups.
Ness said the pipeline’s monitoring system is state of the art. It is DAPL operator Energy Transfer Partners’ — one of the largest pipeline companies in America — only pipelines with its own monitoring center, which is staffed 24/7 with two employees, Ness said in the webinar.
“This pipeline was studied for years. The (Public Service Commission) did additional hearings,” Ness said. “And all of a sudden a District of Columbia judge comes along and rules that you can’t do an (Environmental Impact Statement) with this pipeline operating, which has been operating for three-plus years, efficiently, safely and reliably.”
Ness said the ramifications of Monday’s decision are significant.
“For every dollar less that we receive for a barrel of oil in North Dakota, it’s $40 million a year to the state budgets,” Ness said. “Oil and gas production taxes alone account for 50% of our state’s revenues.”
Ness said a large percentage of this oil is produced on the Fort Berthold Indian Reservation, which is going to have dramatic impacts to Three Affiliated Tribes Chairman Mark Fox’s revenue stream and all of the jobs that are generated on that reservation.