Energy Transfer Targets Washington in Next Battle Over Oil Line

  • CEO Warren plans meetings in D.C. to push Dakota Access
  • Obama administration stalls pipeline after judge approves it

Energy Transfer Partners LP Chief Executive Officer Kelcy Warren said his company would take the battle to complete the Dakota Access oil pipeline to Washington after the Obama administration’s decision to stall part of the project.

Construction on a portion of the pipeline was halted Friday after the administration said it wouldn’t authorize work on federal land along the route while it reconsiders prior decisions to allow it. The move came minutes after a federal judge rejected a request by the Standing Rock Sioux Tribe to halt work on the $3.8 billion project.

The government’s decision to block the 1,172-mile pipeline that would transfer crude from North Dakota’s Bakken region to Illinois was “unprecedented,” according to the head of an oil industry trade group. Opponents say Dakota Access would damage culturally significant sites and create an environmental hazard where it crosses the Missouri River.

"We intend to meet with officials in Washington to understand their position and reiterate our commitment to bring the Dakota Access Pipeline into operation," Warren said in a memo to employees on Tuesday. "We are committed to completing construction and safely operating the Dakota Access Pipeline within the confines of the law."

Jack Gerard, president and chief executive officer of the American Petroleum Institute, and Sean McGarvey, president of the North America’s Building Trades Unions, warned of potential ripple effects from the government’s decision.

Celebrity Opponents

"It’s an arbitrary act that creates that chilling effect," Gerard said on a conference call Tuesday. "It has impacts well beyond this particular pipeline."

Opponents including Hollywood celebrities Susan Sarandon and Ben Affleck say Dakota Access would damage sites of historic and cultural significance and pose environmental risks where it crosses the Missouri River. More than 30 protesters were arrested prior to Friday’s court ruling. Critics include members of a group that opposed TransCanada Corp.’s Keystone XL pipeline.

"It is unfortunate that the corporate world chooses to ignore the millions of people and hundreds of tribal nations who stand in opposition to the destruction of our lands, resources, waters and sacred sites," Dave Archambault II, chairman of the Standing Rock Sioux Tribe, said in a statement.

Dakota Access, which is scheduled to be in service in the fourth quarter, is nearly 60 percent complete, Warren said in the memo. While Dallas-based Energy Transfer Partners respects the constitutional right of opponents to express their opinions, it has obtained the right of way for the pipeline and will not tolerate threats or attacks on employees working on the project, Warren said.

The company’s shares fell as much as 7.3 percent to $35.20 on Tuesday, the most intraday since March. The stock is down about 13 percent since the close of trading on Thursday, prior to the court ruling and government’s decision.

The union association is exploring legal options to respond to the halt. McGarvey and Gerard emphasized the need for clarification from the federal agencies.

"It changes the rules in the middle of the game," Gerard said.

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