A troubling development in the energy infrastructure world is the increasing frequency of projects finding themselves stuck in a seemingly never-ending legal limbo. This is what happened with the Dakota Access pipeline (DAPL). It could be the canary in the coal mine for other critical energy projects heading to court.
The decision this week by U.S. District Court Judge James Boasberg requires pipeline developer Energy Transfer to empty DAPL with its 1,100+ mile crude oil line that spans from North Dakota to Illinois, by Aug. 5. Simultaneously, it must shutter its operation until the U.S. Army Corps of Engineers completes an Environmental Impact Statement (EIS) of the project.
Estimates suggest at least a 13-month completion timeline for the additional environmental review, which comes after the Corps’ initial Environmental Assessment (EA) found a “Finding of No Significant Impact” (FONSI) in 2016. A FONSI has no follow up EIS requirement. This finding is without merit.
An emergency stay by Energy Transfer has already been denied in court, and per the company’s statement an appeals process appears to be the next step for DAPL.
After undergoing the rigorous permitting process conducted by both federal and state regulators and subsequent construction, the DAPL project came online in June 2017 and served as the only direct delivery pipeline for Bakken-produced crude oil to refineries and markets at the Patoka Energy Terminal in southern Illinois. For three years, the pipeline safely delivered as much as 570,000 barrels per day … no issues, zero. This is about 40% of North Dakota’s oil production for distribution throughout the Midwest and into the Gulf for a variety of essential uses.
To many, DAPL was a sign of the growing American energy promise: impressive capacity, efficient marketplace delivery and technologically innovative. For others the project was pipeline non grata and represented the dangers of an industry deemed “public enemy number 1.” Where are the dangers?
Now that there is a pause, what will the world look like in 13 months? Will the U.S. have a President Biden? Will medicine have delivered a vaccine for COVID-19 or will we all be comfortable in our masks? Will the U.K. finally be finished with Brexit?
When the EIS determination rolls around in 13 months, there will be one inviolate truth: American energy independence will be at risk. There will be others.
First, international adversaries will have made gains in energy capabilities and likely targeted American allies for energy contracts in hopes of extending influence to new regions. Specifically, Russian and Chinese state-supported projects will be major players in the global energy marketplace.
For the Putin regime, expect Nord Stream 2 to be complete. Additionally, China and Russia look set on developing their shared ”Power of Serbia” pipeline for mutual benefit. With these projects and the DAPL shutdown, Russian economic energy resurgence is already underway.
Second, the U.S. could fail to meet rebounding energy demands and perhaps loses global market share as COVID-19 lockdowns ease. Industry bankruptcies from the pandemic, DAPL’s closure, the recent abandonment of the Atlantic Coast pipeline, and complete uncertainty in the regulatory environment has left our nation vulnerable.
The International Energy Agency’s (IEA) June 2020 Outlook report indicates a stronger than expected rebound for crude oil demand, buoyed by a revision upwards for 2020 demand by 500,000 barrels per day. With DAPL’s closure, the U.S. has already lost that capacity, and the IEA anticipates crude oil supply “to tumble by a massive 7.2 mb/d [million barrels per day] on average in 2020.” The American energy industry has been told “to take a knee.” Being an energy net exporter for 2020 remains elusive and is all but gone.
Inarguably, American national security suffers. By leaning into the role of energy exporter and friendly trade partner, American national security improves and the country gains allies by promoting prosperity. Without that advantage, expect other nations to assert themselves. You won’t find any new democracies in that formation.
Judge Boasberg’s DAPL ruling has clouded the landscape for energy infrastructure amid a number of unique disruptions that have all contributed to unsettling many of the energy advantages America has enjoyed. However, the reality of infrastructure is that it is essential to make use of natural resources and supports critical functions of the country’s interests and economy. To make up for these losses, the United States better ensure that regulators and the judiciary find reason to endorse future infrastructure buildouts.
• James “Spider” Marks is a retired U.S. Army major general and strategic adviser to the GAIN Coalition — Grow America’s Infrastructure Now.