Energy Transfer said July 8 it is accepting crude oil volumes nominations for August on the Dakota Access Pipeline and maintaining business as usual for now after the pipeline was ordered shut by a federal judge.
The Dallas-based midstream firm is considering its legal appeals options and strategies as it fights to keep DAPL flowing after it was told it must shut the pipeline down by Aug. 5 pending a more thorough, court-ordered environmental study.
Sources have said the company would need to start emptying the 570,000 b/d crude pipeline by mid-July in order to meet the early August deadline imposed by Judge James Boasberg of the US District Court for the District of Columbia.
When asked on July 8 if Energy Transfer had begun the emptying process, Energy Transfer spokeswoman Vicki Granado said in a statement, "No, we are not shutting in the line. As we stated yesterday, we believe Judge Boasberg exceeded his authority and does not have the jurisdiction to shut down the pipeline or stop the flow of crude oil."
The four-state Dakota Access Pipeline originates in North Dakota and runs to a hub near Patoka, Illinois, where it connects with the Energy Transfer Crude Oil Pipeline to Nederland, Texas. The system provides an outlet for crude producers in the Bakken and Three Forks areas of the Williston Basin to ship their barrels south.
However, the spot Bakken crude market has been inactive since the July 6 order, due to the uncertainties surrounding DAPL.
Colton Bean, a midstream analyst with Tudor, Pickering, Holt & Co., said it isn't surprising that Energy Transfer would accept August nominations in order to avoid a business interruption in case the firm's appeals effort proves successful.
Other pipeline firms, including Crestwood Equity Partners, have been quick to offer alternatives to flowing crude volumes from the Bakken Shale in the event that DAPL is shuttered for some period of time, or permanently. Crestwood touted its Arrow gathering system and its COLT hub terminal, which can help service crude transportation by pipeline, rail or truck.
"In the event of a shut-down of the DAPL pipeline in August or at some future point, Bakken basis differentials will be negatively affected in the short term until production volumes are reallocated to other pipelines and rail facilities," said Crestwood CEO Robert Phillips in a statement.
A long fight
Judge Boasberg on July 7 denied Energy Transfer's emergency request for a stay to avoid the ordered shutdown of the pipeline in August, meaning Energy Transfer must rely on appeals, status hearings or some kind of intervention from the White House. Otherwise, Energy Transfer would have to wait longer for the appeals process to unfold with a three-judge panel.
The unprecedented ruling to shutter an existing pipeline -- which was completed three years ago amid a series of intense environmental protests and arrests -- came after the judge determined the US Army Corps of Engineers failed to conduct a proper environmental review as required by the National Environmental Policy Act.
The Trump administration has pushed the Corps to fast-track the review processes for pipeline projects that were moving along much more slowly under former President Barack Obama. The industry concern is that if presumptive Democratic nominee Joe Biden beats Trump in November's election, then the Dakota Access Pipeline could be permanently closed and other pipeline projects shelved indefinitely.
