First it was the pandemic. Then the oil price war. Now legal obstruction is posing a great challenge to the oil and gas pipeline industry in North America. In the last month, three major projects were dealt a major blow.
Despite a favorable U.S. Supreme Court ruling on June 15 to allow the project to move forward, Dominion and Duke Energy announced on July 5 that it was canceling the Atlantic Coast Pipeline. The proposed joint venture project would have involved the construction of $5 billion, 600-mile pipeline to supply natural gas to customers in Virginia and North Carolina. The project owners cited ongoing delays and increasing cost uncertainty in the form of future litigation risk as a threat to the economic viability of the project.
The ever-controversial Dakota Access Pipeline, which began operations in 2017, was the next victim, as a U.S. District Judge James Boasberg in Washington, D.C., ordered that the 1,172-mile pipeline be shut down pending additional environmental review. During construction, the project faced some the strongest opposition from protesters supporting the Standing Rock Sioux Tribe, whose reservation was impacted by the pipeline. Now, Energy Transfer is seeking an expedited appeal to keep oil flowing through the pipeline.
Finally, the long-suffering Keystone XL pipeline suffered a U.S. Supreme Court defeat when the justices upheld a lower court ruling that the project cannot use the “Nationwide Permit 12” that allowed pipelines to cross rivers with minimal review if they meet certain criteria. Project owner TC Energy had announced in May that it was increasing capital expenditure to fund construction of the pipeline, which required an additional investment of approximately $8 billion. The goal was to have the pipeline become operational in 2023, supplying 575,000 barrels per day of oil to refining facilities in the U.S. Gulf Coast.
So where does that leave the pipeline industry?
Despite blocking Keystone XL from using the Nationwide Permit 12, the Supreme Court did rule that other pipeline projects could return to using that permit aimed at fast-tracking construction of vital oil and gas infrastructure. That decision says nothing, however, about opposition from third party entities.
Successfully navigating pipeline project processes seems to becoming more challenging no matter how favorable the current administration may be toward building oil and gas pipeline infrastructure. Maintaining high safety standards and conducting ironclad environmental reviews seems to be the surest path toward approval. The rebound of the pipeline industry is counting on new projects to expand and enhance energy infrastructure for future generations.Tags: Atlantic Coast Pipeline, Dakota Access Pipeline, Editor's Message, Keystone XL