July 13, 2020

Is It “Impossible” To Build An Oil Or Natural Gas Pipeline In The United States?

A Bloomberg headline last week asked if it is almost “impossible” to build oil and natural gas pipelines in the United States. Based on several developments in the last two weeks, it seems the country is getting closer to that point.

As Axios reported, last week Duke Energy and Dominion Energy announced that they will abandon plans for its Atlantic Coast Pipeline, a proposed 600-mile natural gas pipeline that was to stretch from West Virginia to North Carolina. Axios said the decision “ends one of the highest profile battles over fossil fuel infrastructure in recent years, and its demise is a win for the environmental groups that spent years fighting it” and “also underscores hurdles facing big pipelines and other projects, despite White House efforts to speed up approvals and scale back environmental reviews.”

The price tag for the pipeline already had reached $8 billion, far above the initial project estimates. Duke and Dominion said the Atlatnic Coast Pipeline had become “too uncertain to justify investing more shareholder capital.”

In the Midwest, meanwhile, Judge James E. Boasberg of the U.S. District Court for the District of Columbia Circuit ordered the shutdown of the Dakota Access Pipeline, which runs from North Dakota to an oil storage terminal in Illinois, by August 5, 2020. On July 7, then, Judge Boasberg denied Energy Transfer’s emergency request to put the decision on hold while the full court reconsiders it.

As S&P Global Platts reported, Judge Boasberg did acknowledge that he will schedule a status hearing to allow Energy Transfer to argue its case before the shutdown deadline. Energy Transfer, the developer, said it will push for an expedited appeal and other options that will allow the project to continue. According to Reuters, Energy Transfer would lose $2.8 million to $3.5 million each day the line is idled in 2020 and as much as $1.4 billion for the whole of next year.

Energy Transfer spokeswoman Vicki Granado said, “We are not shutting in the line” because the company believes the judge “exceeded his authority and does not have the jurisdiction to shut down the pipeline or stop the flow of crude oil.”

Also last week, as The New York Times reported, the U.S. Supreme Court rejected a Trump administration request to restart construction on the U.S.-Canada Keystone XL pipeline owned by TC Energy Corp. A lower court judge in Montana had suspended the project in April by invalidating the program permitting oil and gas pipelines to cross waterways with minimal regulatory scrutiny. While construction of the Keystone XL pipeline has been blocked for the time being, the Supreme Court stayed the rest of Judge Brian Morris’ ruling on the permit program, which will allow the construction of other pipelines while appeals move forward.

As a reminder, MSCI partners at the Energy Equipment and Infrastructure Alliance filed an amicus curiae brief with a lower court arguing that allowing construction of the Keystone Pipeline to go forward was necessary to protect the livelihoods of workers, investments by businesses, and the energy security of all Americans.