A proposed pipeline project for moving swelling supplies of Bakken crude oil in North Dakota has hit a roadblock in neighboring Minnesota, causing its sponsor, Canadian-based Enbridge Energy Partners LP, to report Wednesday that the project will be delayed at least a year.
The earliest estimated start-up for the 612-mile, $2.6 billion Sandpiper oil pipeline has been pushed back to sometime in 2017, Enbridge said in a filing to the U.S. Securities and Exchange Commission (SEC). The 225,000 bbl line had been slated to be in service early in 2016.
A likely result will be increased pressure to move North Dakota oil by rail, and on the existing pipeline infrastructure serving the Bakken/Three Forks shale play. Sandpiper is proposed to move the crude to the Clearbrook hub in Minnesota and on into Wisconsin. Genscape called the delay “a small victory for crude-by-rail investors facing competition from growing North Dakota pipeline takeaway capacity.”
“The delay is a result of a longer-than-expected permitting process in Minnesota,” Enbridge noted in a short 8K SEC filing.
Minnesota regulators have requested a more extensive study of the environmental impacts of six possible routes for the pipeline that have been offered by opponents of the company’s proposed route through the state.
A Houston-based spokesperson for Enbridge told NGI‘s Shale Daily the company recently received an oral decision from the Minnesota Public Utilities Commission (MPUC) “indicating another change in the regulatory process for the Sandpiper Project, and [we] are still assessing what effect the decision made by the MPUC will have on the timeline for the project and how it will proceed with the Sandpiper Project application.”
Meanwhile, Enbridge continues to work with stakeholders along the proposed route, the spokesperson said. “Those most directly affected by the project — landowners whose private property will be crossed — support the project. More than 90% of them have signed easement agreements with Enbridge.”
In addition, five county commissions (Polk, Red Lake, Clearwater, Aitkin and Carlton) have passed resolutions or signed letters in support of the project, the spokesperson said. “We will continue to work with the regulatory and permitting authorities, as well as the public, as the regulatory process unfolds.”
Justin Kringstad, director of the North Dakota Pipeline Authority, said the pipeline is “a very important project” for his state’s oil production. “The pipeline will provide growing volumes of crude oil a safe and reliable method of transportation to markets around the United States.”
Oil production that was originally intended to ship on the system in 2016 will need to find alternative methods of transportation until Sandpiper is placed into service, Kringstad said. The proposed pipeline’s capacity equates to the equivalent of four daily trains carrying crude.
As part of a larger campaign seeking tougher federal regulations for crude oil rail shipments, and in response to crude rail shipments increasing “dramatically” in recent years through his state, Minnesota Gov. Mark Dayton late last month sent a letter to his North Dakota counterpart, Gov. Jack Dalrymple, asking him to stiffen-up state requirements on the quality of Bakken crude to reduce its alleged higher volatility.
Ron Ness, president of the North Dakota Petroleum Council, pointed out in an Associated Press (AP) report the irony of the governor’s concerns about trains when his state regulatory panel is now delaying a major pipeline that could help relieve the crude-by-rail traffic through his state. “This is a great project and we’re ready to go,” Ness told the AP.
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