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North Dakota regulators approve route for massive oil pipeline from Bakken

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FILE PHOTO: An oil well pump jack is seen at an oil field supply yard near Denver, Colorado February 2, 2015. REUTERS/Rick Wilking2 / 2

BISMARCK, ND – North Dakota regulators granted a route permit Wednesday for what will be the largest crude oil pipeline out of the state’s fruitful Bakken oil field, leaving Iowa as the only state left to approve the $3.8 billion Dakota Access Pipeline. 

Public Service Commission members Julie Fedorchak and Brian Kalk voted to grant the permit for Dakota Access LLC, a subsidiary of Dallas-based Energy Transfer Partners, which plans initially to ship up to 450,000 barrels of oil per day on the 1,168-mile pipeline from the Bakken and Three Forks regions in western North Dakota.

“This is a massive infrastructure construction project, and it’s really extremely important to the long-term future of North Dakota’s oil industry,” said Fedorchak, who chairs the commission.

Commissioner Randy Christmann abstained from voting, having recused himself from discussions on the pipeline last week after learning that the revised route will cross his mother-in-law’s property and that she’s negotiating an easement with Dakota Access.

Dakota Access also has obtained permits from regulators in Illinois and South Dakota. The Iowa Utilities Board is expected to decide in February on the request.

With a maximum capacity of 570,000 barrels per day, the mostly 30-inch pipeline will start near Stanley and cross South Dakota and Iowa on its way to Patoka, Ill., where crude will be shipped to Midwest and Gulf Coast refineries. The North Dakota leg will stretch 358 miles and account for $1.4 billion of the cost.

The company – which has already staged pipe along the route – anticipates starting construction this quarter and having the pipeline in service by the fourth quarter of 2016, depending on regulatory approvals, spokeswoman Lisa Dillinger said via email.

Fedorchak said the pipeline will provide a safer alternative to moving oil by train or truck. About 41 percent of oil produced in the Williston Basin, or 520,000 barrels per day, was shipped by rail in November, down from a high of about 60 percent in late 2014, according to the state Pipeline Authority.

The PSC conducted an “exhaustive” review of the project and addressed concerns about reclamation and routing, Fedorchak said, noting there were more than 17 reroutes, many at the request of landowners.

Kalk said approving the pipeline route was “the right decision” to keep improving the nation’s transportation system for commodities.

Still, the project hasn’t been without controversy. Some landowners complained early on about the company using strong-arm tactics, and one property owner in Iowa alleged that an agent offered to pay for a prostitute to entice him to allow for pipeline right-of-way.

Dillinger said Dakota Access has secured voluntary easement agreements on 85 percent of properties along the four-state route, including 92 percent in South Dakota, 78 percent in Iowa, 86 percent in Illinois and 88 percent in North Dakota – though PSC officials said the North Dakota figure is up to 95 percent, which Fedorchak said “indicates that a vast majority of the landowners that the company’s working with are satisfied that their needs are being met by this project.”

Bismarck attorney Derrick Braaten is representing 35 to 40 landowners who represent about 10 percent of the mainline route in North Dakota. There was initially frustration from individual landowners when dealing with Dakota Access and its agents, but after landowners banded together, it was “a much more amicable negotiation, and I think our members are happy with the result,” he said.

“Within the next few weeks we should have most of our members signed,” he said.

Half a dozen union workers in the audience broke into applause after the vote. Steve Cortina, representative for the Local 563 Laborers Union, which has about 11,000 members in North Dakota and Minnesota, said the pipeline is expected to create 300 to 500 construction jobs in North Dakota and will allow workers finishing other pipeline projects to remain in the state.

“It’s a huge boost,” he said.

Dakota Access still needs U.S. Army Corps of Engineers approval for those two Missouri River crossings, where the pipe will be bored 35 feet and 64 feet under the riverbed. The pipeline will cross waterways seven times in all and remove about 37 acres of land from agricultural production, primarily because of six tank terminals.

A control center in Houston will continuously monitor the pipeline and be able to remotely shut valves in the event of an emergency, Fedorchak said.

She noted Dakota Access will pay an estimated $40 million in state sales tax, $1.7 million in local sales tax, $1.5 million in state income tax and $13.4 million annually in local property taxes. 

Reach Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com.

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