Keystone XL denial affected Dakota Access Pipeline strategy, executive says

BISMARCK — The denial of the Keystone XL pipeline affected how the company building the Dakota Access Pipeline executed its strategy, one of its engineering executives said Tuesday at the Williston Basin Petroleum Conference.

Joey Mahmoud, the senior vice president of engineering for Energy Transfer Partners, said the $3.78 billion pipeline project now in the early stages of being built emphasized using labor unions and avoiding federal lands as the company watched Keystone XL fail to get built.

Mahmoud said 96 percent of the 1,168-mile, 450,000-barrel-a-day crude oil pipeline’s route from Stanley, N.D., to Patoka, Ill., is set and the project should be completed by the end of 2016. However, about 50 miles of the pipeline’s proposed route in Iowa are still awaiting approval and the U.S. Army Corps of Engineers still needs to approve river crossings.

“Developing a project of this magnitude in this economy, under this administration, has been very difficult,” Mahmoud said.

Mahmoud told those listening to his presentation during the Bakken Transportation & Value Added Bakken breakout session that “it wasn’t by accident” that Energy Transfer Partners emphasized using labor unions and the potential creation of as many as 12,000 construction jobs–including up to 4,000 temporary jobs in North Dakota–when pitching the pipeline to stakeholders.

Cory Bryson, a business representative for Laborers Local 563 of Bismarck, a division of Laborers’ International Union of North America, grilled burgers and hot dogs for the conference’s attendees Tuesday near a tent with a sign that read: “LiUNA Builds Dakota Access!”

Bryson said work across North Dakota has been “holding pretty steady” despite the energy industry’s slowdown. However, he said the Dakota Access Pipeline stands to change that.

“We’re looking for 350 to 450 laborers working on this project for about five to six months,” Bryson said.

Work began this week in North Dakota to prepare areas of the pipeline’s route. Mahmoud said early construction has started in South Dakota and Illinois, as well. In Iowa, the company still has work to do.

Energy Transfers spokeswoman Vicky Granado said she was unable to provide the exact locations where construction has begun in North Dakota but said several “spreads” are being worked on along the route.

“Work is going on at multiple spreads at the same time; it’s not like you start at point A and finish at point B,” she said. “That’s how we’re able to meet our construction timeline

“It’s a very orchestrated construction project,” she said.

The project starts with the preliminary work of clearing the right of way. No trenching has started yet but the pipe for the project is being held at pipeyards along the route until ready to be laid, Granado said.

Where possible, the pipeline route parallels existing pipelines, power lines and roads. The pipeline is buried a minimum of 3 feet — more if it crosses under roads, rivers, lakes, streams or agricultural fields.

Energy Transfer Partners has 100 percent of the easements needed for the project in North Dakota, as well as in South Dakota, but it is still awaiting U.S. Army Corps of Engineers’ permit approval for water crossings. Construction has also begun in Illinois, where 99 percent of easements have been obtained, Granado said. About 90 percent of easements are in place in Iowa.

Granado said water crossing approval is expected within the next couple months.

Granado said Energy Transfer Partner’s depth of experience and relationship with regulatory agencies has made the company confident enough to start construction before all permits have been granted.

Mahmoud said the company estimates North Dakota could see $47.7 million in sales tax influx during construction and the first year of the pipeline’s operation. He added that Energy Transfer is making a $1.4 billion capital investment into North Dakota.

“Post-Keystone era, what we’re trying to do is demonstrate the importance of these projects and how important Keystone would have been–the jobs, the multi-millions of dollars,” Mahmoud said.

Keystone XL was a 1,200-mile, 800,000-barrel-a-day pipeline proposed by TransCanada Corp. that would have gone through six states, including southeast Montana and South Dakota. The pipeline was denied by President Barack Obama last November after a years-long political fight.

Mahmoud said Energy Transfer Partners intentionally stayed away from federal land wherever it could while planning the pipeline in an attempt to help speed up its approval. He said the pipeline only crosses about 5 miles of federal land.

“Part of our strategy, again, to minimize the permitting and the federal involvement into a project like this, was to minimize the environmental permits you need,” he said. “Not to get around the environmental protections, but to minimize how much the federal government can oversee the project from a permitting standpoint. We went way out of our way to avoid federal land. We went out of our way to avoid public land, as well as Native American land, to minimize the impact not only to the public but to the permitting time frame.”

The Dakota Access Pipeline has the potential of delivering as many as 570,000 barrels a day, Mahmoud said. It runs through seven North Dakota counties, starting in Mountrail and looping to Williams and McKenzie counties–where the final receipt point will be located near Johnson’s Corner–before heading through Dunn, Mercer, Morton and Emmons counties into South Dakota.

Jessica Holdman of the Bismarck Tribune contributed to this report

Author: Dustin Monke

Former newspaper editor. Now I market the best baked goods and donuts in America. But every once in a while, I write a cool story too.

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