The Daley Note: September 15, 2023
A new environmental review of the Dakota Access Pipeline (DAPL) is finally available. The draft report from the US Army Corps of Engineers lays out five possible scenarios for the controversial pipeline without making a recommendation, though regulators appear to be leaning in one direction.
The Army Corps released the draft environmental impact statement (DEIS) last Friday (September 8) concerning DAPL’s easement to cross under Lake Oahe in South Dakota. The DEIS is the result of a federal court order in January 2021 finding that the agency did not adequately evaluate the environmental risks of the pipeline. To the chagrin of opponents, DAPL has continued to operate while the Army Corp conducts the new review.
Operated by Energy Transfer (ET), DAPL is the largest transporter of Bakken crude oil. According to East Daley Analytics’ Crude Hub Model, DAPL moves about 600 Mb/d, or nearly 50% of crude production from the Williston Basin (see chart).
The DEIS presents five scenarios for evaluating the DAPL route: 1) the Army Corps does not grant easement and ET must restore the area to pre-pipeline conditions (i.e. remove pipe) 2) the Army Corps does not grant the easement and no further action is required 3) the Army Corps grants the easement consistent with vacated easement conditions 4) the agency grants the easement with additional conditions and 5) a northern reroute of DAPL toward Bismarck, ND.
While the DEIS does not make a specific recommendation, it does suggest certain options could be ruled out. For example, the draft finds options 1 and 2 (i.e. not granting the easement) as “unlikely to meet a project’s purpose and need but should be evaluated to inform decision making.” The DEIS states that it is not a reasonable alternative to use other energy sources in place of DAPL, as proposed by some commenters. Additionally, the DEIS eliminates rail or trucking as viable alternatives to DAPL.
Based on EDA’s reading of the document, the most probable outcome appears to be Option 4. Once the dust settles, we expect the Army Corp to grant the easement for DAPL with additional conditions.
The initial easement permit for DAPL required 36 conditions that the pipeline is currently meeting. The additional conditions proposed in the draft would increase operational safety and facilitate incident notification and shutdown processes. They would not require additional construction activities.
In the event an easement is not granted, DAPL may pursue the Bismark reroute (Option 5). This option would require evaluation by North Dakota state regulators, who previously approved DAPL’s current route.
The Army Corps has scheduled two public meetings in November to gather community feedback on the DEIS. ET is the largest owner in DAPL with a 36.2% stake. Other partners include Enbridge (ENB), Phillips 66 (PSX), MPLX (MPLX) and ExxonMobil (XOM). – Kristine Oleszek Tickers: ET, ENB, MPLX, PSX, XOM.
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