Pipelines Are Needed, but the Obama Administration Continues to Stand in the Way

Oil and natural gas pipelines are the safest means of transporting oil and natural gas from their production sites to their many consumers across the country. According to the Energy Information Administration, oil and natural gas supply two-thirds of today’s energy needs and are expected to supply the same amount by 2040. Yet, the Obama Administration is halting progress on the infrastructure needed to ship them. First, President Obama denied the Keystone XL pipeline to be constructed causing the developer, TransCanada, to file a law suit of $15 billion for damages under the North American Free Trade Agreement (NAFTA).[i] And, just last Friday, Obama’s Departments of Justice and Interior along with the U.S. Army Corps of Engineers shut down construction on the Dakota Access Pipeline that would move oil from the Bakken basin to Illinois despite the pipeline having all of its permits from the Army Corps of Engineers and despite the court ruling in the pipeline’s favor regarding a suit from an Indian tribe to halt construction.

The Dakota Access Pipeline

The Dakota Access Pipeline is a $3.8 billion, 1,100-mile oil pipeline to be constructed in the Upper Midwest that will traverse four states, carrying oil from the Bakken basin in North Dakota to a refinery in Illinois. It was to be completed by year-end and was 45 percent complete last month.[ii] When completed, it would move 470,000 to 570,000 barrels of Bakken oil per day. [iii]

On Friday, a judge ruled in favor of the pipeline and against the Standing Rock Sioux tribe and other opponents, who wanted construction halted because they claim there may be possible contamination of drinking water and disruption to culturally important sites. But, after the judge ruled in favor of the pipeline, three federal agencies immediately halted the pipeline’s construction. Despite having already granted approval, the U.S. Army Corps of Engineers said it would not allow construction near Lake Oahe until it determined whether it needed to reconsider its previous approvals under the National Environmental Policy Act.

U.S. District Judge James Boasberg did not grant an injunction sought by the tribe because he did not agree that the federal government failed to consult with the tribe as required by law and that the pipeline would cause irreparable harm to the tribe’s heritage. The Army Corps documented dozens of attempts to consult with the tribe from the fall of 2014 through the spring of 2016, which included at least three site visits to Lake Oahe to assess any potential effects on historical properties.

Also wanting the pipeline’s construction halted are 31 environmental groups, who asked the president to intervene and repeal the permits for the pipeline. Many of these groups are part of the “keep it in the ground” movement which seeks to deny Americans the use of any oil, natural gas or coal and opposes all aspects of fossil energy exploration, development, production or transportation.

The pipeline is sorely needed because North Dakota’s Bakken Shale formation is isolated from the nation’s network of pipelines and must rely on trains to transport the oil, which are more expensive and less safe. The Dakota Access pipeline would reduce the potential for accidents as well as environmental impacts by reducing the amount of crude oil that is shipped by train.

Unlike the Keystone XL pipeline, the Dakota Access pipeline does not need Presidential approval, making this decision even more arcane. Further, the Obama administration said that the conflict highlighted the potential need for nationwide reform on how infrastructure is sited on or near Native lands, making it clear that it will be much more difficult and costly for these types of projects to be approved in the future.

Pipelines are Safe

America depends on a network of over 2 million miles of liquid petroleum, gas transmission and gas distribution pipelines to safely and efficiently move oil and natural gas from production sites to consumers.[iv] Over the past 5 years, there has been a 13-percent increase in the miles of liquids pipelines that traverse America delivering crude oil, refined petroleum products and natural gas liquids, now totaling 207,800 miles. A new report by the Association of Oil Pipelines and the American Petroleum Institute indicates that 99.999 percent of crude oil and petroleum products delivered by pipeline reach their destination safely. A total of 16.2 billion barrels of crude oil and petroleum products were delivered by pipeline in 2014, representing a 20 percent increase since 2010.[v]

According to the report, despite the 13-percent increase over the last five years in miles of pipeline delivering crude oil, petroleum products and natural gas liquids, pipeline incidents per mile larger than 500 barrels were reduced by almost a third. And, incidents that could potentially impact people or the environment outside of an operator’s facility were reduced by 52 percent since 1999. These statistics have been achieved because pipeline operators are using new technologies to keep pipelines safe, new methods for inspecting, monitoring, building, and performing preventative maintenance on pipelines, and new systems for managing pipeline safety programs.[vi]

Conclusion

Despite the United States needing oil and natural gas to fuel our homes, businesses, transportation and industries, the Obama Administration is halting construction on yet another pipeline that is needed to bring crude oil from North Dakota to a refinery in Illinois. The Obama Administration is doing this despite a federal court ruling that would let the pipeline construction proceed and despite the Army Corps of Engineers already approving the project. The pipeline was to be completed by the end of the year with 45 percent of the construction already complete. However, this action by the Obama Administration means at least a delay in the pipeline’s construction and it will cost Americans jobs and the pipeline company added expense.

It also sends a strong signal to energy investors in the United States that the government no longer abides by legal contracts and calls into question all projects, even after they have received approval to proceed. Investors who could produce jobs and wealth in the United States are getting a strong signal to invest elsewhere because of political risk. This opens a new chapter in the concept of the Rule of Law, which our Constitution and legal system have heretofore adhered to.

[i] Washington Post, TransCanada is suing the U.S. over Obama’s rejection of the Keystone XL pipeline. The U.S. might lose., January 8, 2016, https://www.washingtonpost.com/news/monkey-cage/wp/2016/01/08/transcanada-is-suing-the-u-s-over-obamas-rejection-of-the-keystone-xl-pipeline-the-u-s-might-lose/

[ii] Wall Street journal, U.S. Agencies Order Dakota Access Pipeline Work Halted After Judge Rules It Can Proceed, September 9, 2016, http://www.wsj.com/articles/judge-rules-3-8-billion-dakota-access-pipeline-can-proceed-1473450128

[iii] Oil Price, Bad News For The Bakken As Obama Administration Blocks Pipeline, September 12, 2016, http://oilprice.com/Energy/Crude-Oil/Bad-News-For-The-Bakken-As-Obama-Administration-Blocks-Pipeline.html

[iv] Pipeline 101, http://www.pipeline101.com/why-do-we-need-pipelines

[v] Energy Global World Pipelines, Strategic Pipeline Safety Plan, http://www.energyglobal.com/pipelines/equipment-and-safety/22082016/Strategic-pipeline-safety-plan-by-AOPL

[vi] Bakken Magazine, New pipeline report reveals importance to energy transport, August 31, 2016, http://www.thebakken.com/articles/1657/new-pipeline-report-reveals-importance-to-energy-transport

The post Pipelines Are Needed, but the Obama Administration Continues to Stand in the Way appeared first on IER.

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