DAPL Ruling Threatens Future of North Dakota’s Oil Industry

Judge Boasberg of the U.S. District Court for the District of Columbia recently ruled that the Dakota Access Pipeline must shut down pending further environmental review. The decision to shutter the pipeline after three years of safe operations will have far-reaching negative consequences. Inforum recently reported: 

“North Dakota’s Industrial Commission was grappling to formulate a game plan for the state’s oil industry Tuesday, July 7, after a federal judge halted operations of the Dakota Access Pipeline earlier this week, a sudden blow to oil companies already limping through the pandemic.”

North Dakota Governor Doug Burgum was quick to criticize the decision, citing the economic harm of setting legal precedents that discourage investment.

“’This is the kind of risk that would just chase capital out,’ Burgum said, warning of the effects that the decision may have on North Dakota’s oil output and arguing the hit to North Dakota oil production will ‘hand a gift to all of our competitors’ in overseas oil-producing countries.”

An article published in the Midland Reporter Telegram elaborated on just how harmful the decision could prove to be.

“Dakota Access, which started up in 2017, was fundamental to advancing North Dakota’s oil production…Shutting the pipeline will mean oil can’t leave the state economically at a time when a pandemic-related glut gives buyers plenty of oil to choose from…The alternative of using rail would double the cost of transportation.”

Industry affiliates denounced the decision for similar reasons, noting that resulting economic damage would not be confined to the Bakken.

“Phillips 66, which owns a stake in the pipeline, said Monday it was disappointed in the court ruling. ‘The negative impacts resulting from this court’s decision to markets, customers, and jobs up and down the energy value chain will inflict more damage on an already struggling economy and jeopardize our national security,’ Dennis Nuss, a spokesman, said in an emailed statement.”

It is still too early to determine just how North Dakota’s oil industry will respond to the ruling, but its harmfulness cannot be overstated.

“One thing’s clear: The closure will be devastating for the Bakken, which once jostled to become the nation’s most prolific crude-producing field.”