Disregarding criticism from the Native American tribes and environmental groups, Texas-based pipeline operator Energy Transfer Partners L.P.’s $3.8 billion project-Dakota Access Pipeline became operational on Jun 1.
The 1,172-mile-long pipeline will carry oil between North Dakota and Illinois, where the crude will be transported to the refineries on the Gulf Coast or East Coast. With a capacity to carry about 520,000 barrels of oil per day, the pipeline is likely to bridge the gap between Bakken players and producers in other U.S. oil producing areas like the Williston and Permian basins. The pipeline is likely to help in improving the region’s drilling economics by lowering transportation costs for operators. The commencement of the pipeline’s service is likely to speed up the revival of Bakken output which plunged with the sharp fall in crude prices. Large operators like Hess Corp. (HES - Free Report) and Oasis Petroleum Inc. (OAS - Free Report) are counting on the Dakota Access Pipeline to send a major portion of their product to market.
The pipeline, which was supposed to become operational by the end of 2016, received immense censure delaying the commencement of services.
Work on the project was halted by the Obama administration last year amid protests from a Native American tribe, blocking the construction of the final part of the pipeline through North Dakota. The protest drew international attention as the Standing Rock Sioux Tribe objected the project. They were of the opinion that the pipeline would desecrate their sacred burial ground as well as contaminate the water supply.
Efforts to complete the Dakota Access Pipeline were reinvigorated after President Trump’s actions brushed aside former President Obama’s efforts of blocking the pipeline's construction. Trump ignored the bitter opposition from environmental activists and ordered the completion of the pipeline.
In February, Energy Transfer received the final approval from the U.S. Army for the completion of the Dakota Access Pipeline construction. In March, a federal judge in Washington, D.C., denied Sioux nation’s request to order an emergency injunction preventing the pipeline from becoming operational.
The pipeline which became functional since Jun 1, despite pending litigation against its operator, has already leaked at least three times. However, there is still no oil spill response plan in place.
The Standing Rock Sioux Tribe, who believes that Energy Transfer did not complete a full environmental review and that President Trump ignored their treaty rights, will continue with their battle against the pipeline. The chairman of the tribe said,
"Now that the Dakota Access Pipeline is fully operational, we find it more urgent than ever that the courts and administration address the risks posed to the drinking water of millions of American citizens,”
Many believe that the pipeline operation will unlock nation's economic potential and lead to the creation of jobs. However, without a proper emergency response plan, further spills may cause severe environmental damage.
Energy Transfer is a master limited partnership, headquartered in Dallas. The partnership is engaged in the intrastate transportation and storage business of natural gas in the U.S. Energy Transfer Equity, L.P. , is the partnership’s general partner and a 100% incentive distribution right in the partnership.
The partnership, under Zacks categorized Oil and Gas Production Pipeline-MLP, carries a Zacks Rank #3 (Hold).
Energy Transfer Partners LP Price
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