The Sierra Club has come out with a helpful update on the Dakota Access Pipeline (DAPL), filling in some of the details about the financial pressures and deadlines DAPL faces. To sum it up quickly, DAPL is unlikely to move forward until the Trump administration takes office Jan. 21, and even then it “may not be a simple feat.” And DAPL could start losing key contracts by Jan. 1.
Meanwhile, DAPL is facing criticism from the financial sector.Here is a key part of the Sierra Club’s Q&A, which indicates DAPL may already be too late to make an important deadline. It gives the details on DAPL’s financial vulnerability to delays.
How risky is DAPL’s financial situation?
If the DAPL pipeline does not become operational by the start of the new year – and it is very unlikely it will operate before Jan 1,2017 – it’s financing will be jeopardized. Companies that would ship oil on DAPL entered into long-term shipping contracts in 2014 at a time when oil prices were averaging close to $100 per barrel and Bakken production was soaring and projected to continue increasing through 2020. Starting in late 2014, oil prices have plummeted and now hover in the $40-$50 range, while Bakken oil production has steadily declined. Thus, it is likely that some of the shippers want to terminate or renegotiate their contracts, which they have a right to if the DAPL is not operational by January …
DAPL previously estimated that it will take 90-120 days to complete drilling under Lake Oahe, although that time frame may be shorter now that the company has its equipment in place and appears to have already drilled up to the border of Corps property. Nonetheless, it is almost certain that at this point, DAPL cannot meet the January 1 in-service deadline under any circumstances.
More Criticism of DAPL from the Financial Sector
We wrote this morning about how DAPL’s financial risks are raising red flags on Wall Street. Here are two more powerful statements coming from investment firms that specialize in socially responsible investing.
We are troubled by the manner in which Energy Transfer Partners, L.P. [ETP] has approached the concerns of the Standing Rock Sioux Tribe in the construction of the Dakota Access Pipeline (DAP)….
Although ETP claims that they consulted the Standing Rock Sioux Tribe on the DAP, their approach was entirely inadequate in our view. They only consulted with the Tribe after the pipeline had received approval from the Army Corps, not during the planning stage. Moreover, according to Tribal leaders, their consultation was merely to inform the Tribe of their plans; they had no intention to gain agreement or community support.
BE IT RESOLVED, the Boards of Trustees/Directors of the Calvert Social Funds, together with Calvert Investments, Inc. support the Standing Rock Sioux Nation as it stands steadfast in its peaceful efforts to halt construction of the Dakota Access Pipeline and protect both its sacred lands and its source of clean drinking water. Following traditional wisdom, the Tribe seeks to implement sustainability and peaceable solutions and to ensure that its human right to water is fulfilled. More broadly, Calvert will maintain our commitment to respect Indigenous Peoples and their essential rights both nationally and globally as we all strive together toward the creation of a meaningful legacy for future generations.
No Surprise: New ND Governor Pro DAPL
North Dakota’s new Governor Doug Burgum (R) took office Thursday, and it won’t come as a surprise that he is a pipeline supporter. An MPR story cited a Facebook video by Burgum, who said DAPL is a “legally permitted project” that has been stalled by the Obama administration. Burgum said the pipeline “is good for the North Dakota economy and is the safest method to move oil,” according to the article. “He also said that he wants federal reimbursement for policing costs so that state taxpayers won’t foot the bill.”