N.D. lake restriction puts pipeline in limbo

Analysts were left to speculate on the timeline of the construction of the Dakota Access oil pipeline after President Barack Obama's administration on Friday halted work on a stretch of land allocated for Energy Transfer Partners LP's project.

If left unresolved in the coming months, the administration's move would thrust the fate of the project into the hands of the next president.

The U.S. Army Corps of Engineers won't authorize construction on its land near Lake Oahe in North and South Dakota until it determines if it should reconsider previous decisions to allow the project, the government said in a statement Friday. Federal officials also asked the company to voluntarily pause activity within 20 miles of the lake.

The decision by the Interior Department, Army and Justice Department came shortly after U.S. District Judge James Boasberg in Washington declined a request by the Standing Rock Sioux Tribe to halt work on the $3.8 billion project. The 1,172-mile pipeline that would carry oil from North Dakota's Bakken formation to markets in Illinois has drawn hundreds of protesters, including groups that successfully petitioned the Obama administration to reject the Keystone XL pipeline project.

The question is whether "the prospect for future changes alleviates tension sufficiently so that things simmer down and the pipeline can go forward," said Christine Tezak, managing director at research firm ClearView Energy Partners LLC in Washington. "If tensions don't defuse, I don't know when we'll see it."

The best-case scenario, she said, is a few months of delay, which would mean the project falls into the hands of the next administration.

Earlier, the ruling that construction on the pipeline could proceed came as a blow to critics who said the project would damage culturally significant sites and create an environmental hazard where it crosses the Missouri River.

The project likely complies with the National Historic Preservation Act, Boasberg wrote in a memorandum accompanying his Friday opinion.

"The Tribe has not shown it will suffer injury that would be prevented by any injunction the Court could issue," he said.

The Justice Department, in a joint statement with the Army and the Department of the Interior, said it needs to determine whether it's necessary to reconsider previous decisions regarding the Lake Oahe site under the National Environmental Policy Act and other federal laws.

"It was absolutely the right move," said Jane Kleeb, president of activist group Bold Alliance and, before the current battle, a prominent opponent of TransCanada Corp.'s Keystone XL pipeline. "They listened to the people on the ground and really looked at what's been happening."

Last year, the Obama administration intervened to reject plans for Keystone. Obama said the project -- which had been the subject of heated debate for seven years -- wouldn't make a meaningful contribution to the U.S. economy, lower gasoline prices or increase the country's energy security.

Construction on a segment of the pipeline in North Dakota was stalled after the Standing Rock Sioux Tribe filed a lawsuit challenging the federal permits for the project in July. Bold Alliance has been organizing protests and reaching out to politicians.

The government's intervention leaves Energy Transfer officials in limbo, whereas "at least with the court they had some certainty on timelines and how things are moving forward. Here they have no idea yet when this review is going to be complete," said Brandon Barnes, a Bloomberg Intelligence analyst. Though he said he sees no threat yet to completing the project on schedule by the end of the year, "we don't know how long this delay will last."

The project would run through four states from North Dakota to Patoka, Ill., where it would join another Energy Transfer line that carries oil to refineries in Nederland, Texas, on the Gulf Coast. Energy Transfer is overseeing the project, which is jointly owned with Phillips 66, Sunoco Logistics Partners LP, and a joint venture with Marathon Petroleum Corp. and Enbridge Energy Partners LP.

A Section on 09/11/2016

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