Dakota Access Pipeline will remain open after long legal fight, judge rules



DAPL allowed to operate without proper permitting for now

Bakken producers likely to ramp up activity

Energy Transfer still plans on DAPL expansion

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Houston —
The Dakota Access Pipeline will remain open and continue its flow of Bakken crude oil following a ruling issued May 21 by a federal court, which blamed the US Army Corps of Engineers for inaction on a pipeline that will essentially keep operating illegally for now.

US District Judge James Boasberg of the District of Columbia said the Standing Rock Sioux-led plaintiffs did not prove the necessary irreparable harm to close the 570,000 b/d pipeline, although he argued the Army Corps could have acted without the higher legal burden. A court-ordered environmental review that could put the pipeline in proper legal standing — or potentially force a closure — is not expected to be finalized until March 2022.

The DAPL case was closely watched by industry and environmental observers alike because it could potentially set a standard for attempting to close existing pipelines and other fossil infrastructure. Now, drilling activity should ramp again with the removal of much of the legal uncertainty, according to S&P Global Platts Analytics.

“Due to the constant uncertainty for months, the Bakken has been the slowest basin to recover following the swift slow-down in activity last year,” said Parker Fawcett, North American supply analyst for Platts Analytics. “Bakken rigs remain 67% lower than March 2020 levels, compared to the other major oil shale basins, such as the Permian or Eagle Ford, which have recovered back to 45%.”

With DAPL able to continue to flow, operators should begin ramping up activity in the coming weeks to be more in line with other oil basins, he added.

Platts Analytics expects Bakken crude and condensate production to rise from 1.1 million b/d in May to 1.34 million b/d by the end of 2022.

In the end, Boasberg ruled the plaintiffs did not clear the “daunting hurdle” required by law.

“The court acknowledges the tribes’ plight, as well as their understandable frustration with a political process in which they all too often seem to come up just short,” Boasberg stated. “If they are to win their desired relief, however, it must come from that process, as judges may travel only as far as the law takes them and no further. Here, the law is clear, and it instructs that the court deny plaintiffs’ request for an injunction.”


Previous court rulings by Boasberg and appeals courts had ruled the four-year-old pipeline is operating without a legal water-crossing easement, and they asked the Army Corps to act.

However, the Army Corps said it would allow DAPL to keep flowing for now and would continually monitor the pipeline’s operations and legal status, essentially punting the to Boasberg on the 1,200-mile pipeline from North Dakota to Illinois.

“The Corps has conspicuously declined to adopt a conclusive position regarding the pipeline’s continued operation, despite repeated prodding from this court and the court of appeals to do so,” Boasberg wrote. “Its chosen course has instead been — and continues to be — one of inaction. Such indecision, it is important to note, does not stem from a lack of time. Nor from a lack of attention.

“Whatever the reason, the practical consequences of the Corps’ stasis on this question of heightened political controversy are manifest: the continued flow of oil through a pipeline that lacks the necessary federal authorization to cross a key waterway of agricultural, industrial, and religious importance to several Indian Tribes.”

The plaintiffs reacted with disappointed, but pointed out the fight is not over with the Army Corp’s Environmental Impact Statement review ongoing. They had hoped the Army Corps’ stance would shift after the move from the Trump administration to President Joe Biden — especially after Biden canceled the XL Pipeline permit — but that has not been the case.

“We believe the Dakota Access Pipeline is too dangerous to operate and should be shuttered while environmental and safety implications are studied – but despite our best efforts, today’s injunction was not granted,” said Standing Rock and Earthjustice attorney Jan Hasselman in a statement. “The unacceptable risk of an oil spill, impacts to tribal sovereignty and harm to drinking water supply must all be examined thoroughly in the months ahead as the US Army Corps conducts its review of this pipeline.”

Pipeline operator Energy Transfer did not immediately comment on the ruling, but its executives had remained steadfastly confident in their public comments that DAPL would never close. In fact, an expansion remains on track for later this year.


The Dakota Access fight captured the nation’s attention in 2016 during a prolonged series of , violent eruptions and arrests along the route. Former ultimately intervened to block the pipeline in December 2016 as one of his last, lame-duck acts in office.

But President Trump, in one of his first acts in early 2017, quickly approved the final permit for DAPL — including the water-crossing permit at Lake Oahe that is key to the case — and it was completed that year.

After a lengthy legal fight, Boasberg shocked the energy sector in the summer of 2020 when he ordered DAPL closed. But the US Court of Appeals for the District of Columbia stopped the shutdown, agreeing with the argument that the Army Corps improperly fast-tracked the pipeline’s approval without a proper environmental review, but arguing that a closure required a higher evidentiary standard of irreparable harm.

“It was there, however, that the tribes ran out of luck,” Boasberg wrote in the May 21 ruling. “As a result, for all of the headlines and controversy that this litigation has spawned, its tangible consequences for the pipeline itself have been few.”

Despite the rulings against DAPL, “the pipeline has maintained operations as if none of these developments had occurred,” Boasberg added. “Those seeking an explanation for the persistence of this surprising state of affairs over the past 10-odd months need look no further than the defendant in this case: the Corps.”


Last month, Energy Transfer and other DAPL owners upped the estimated costs of economic losses now that crude oil demand is rebounding, and the state of North Dakota asked to intervene as a defendant because the Army Corps has taking a more neutral stance under the Biden administration.

The state noted that more than 40% of North Dakota’s crude flows through DAPL, and that the pipeline is indirectly responsible for nearly 25% of the state’s revenues and many thousands of jobs.

In an April 19 court filing, Lynn Helms, North Dakota’s top regulator, said a DAPL closure would take months to arrange for alternate crude transportation via other pipelines, and truck, potentially triggering the shut-in of up to 400,000 b/d of crude oil output. And, because of the uncertainty about DAPL’s status during the Army Corps review, many companies will be reluctant to invest in alternate transportation means for the rest of this year, the defendants argued.

Bakken crude for injection on DAPL spiked to as high as a $1.25/b premium to the WTI CMA in March during a serious of court hearings on the pipeline, the strongest in more than two years, S&P Global Platts data shows. The grade then weakened significantly as concerns among market participants that DAPL would shut began to subside, and was assessed May 21 at WTI CMA minus $2/b, more than $3.25/b below the March high.


Jordan Blum


Jeff Mower



Source: Platts


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