Richard Kauzlarich was among the Washington energy policy watchers surprised by the Obama administration’s 11th-hour halt to the Dakota Access oil pipeline, September 9. The contentious pipeline project reminded him of another energy era in a very different part of the world.
As US ambassador to Azerbaijan in 1994-97 under President Bill Clinton, part of Kauzlarich’s job was to facilitate discussions between the government and US oil companies eager to develop oil resources in the Caspian Sea region. A chief barrier was getting the supply to market.
“A major part of the effort there was to make a decision on should this pipeline go by pipeline or should it go by a combination of rail and tanker,” he said. “As we looked at this issue from an environmental and cost point of view, putting that oil on rail cars and shipping it across Azerbaijan and Georgia to a Black Sea port made the environmental risks very, very high.”
So the country decided to go with a pipeline — just the start of a multi-year negotiating process.
“You were building it across three countries, going under rivers, through national parks and areas that were culturally and historically significant. At the end of the day, it was possible to negotiate all of the issues. The stakeholders all saw it in their interest to make this pipeline a success.”
Now Kauzlarich teaches the geopolitics of energy security at George Mason University and is wondering why that sort of stakeholder consultation seems to be breaking down in his own country.
The White House jumped into the Dakota Access oil pipeline fight September 9 after weeks of clashes in North Dakota between private security guards and Native American tribes and environmentalists protesting the construction.
“I may have been on the other side of the world, but somehow we were able to deal with the problems that seem to be in play in this,” Kauzlarich said. “I keep getting more and more convinced that our own energy security is not just a question of how much oil we produce, but how do we efficiently and in an environmentally sound way get oil to its ultimate consumer.”
What’s the Dakota Access project?
A $3.8 billion pipeline to ship Bakken and Three Forks crude from North Dakota to Illinois and onto connecting pipeline networks to Texas Gulf Coast refiners. It has been designed to initially carry 470,000 b/d, with a possible expansion to 570,000 b/d. Energy Transfer Partners, Sunoco Logistics, Phillips 66, Marathon Petroleum and Enbridge Energy Partners own shares in project.
What’s at stake in the Dakota Access battle?
The Standing Rock Sioux Tribe has accused the US Army Corps of Engineers of failing to adequately assess the project’s threat to cultural sites and drinking water quality of Lake Oahe, a dammed section of the Missouri River near the tribe’s reservation.
North Dakota oil producers want more pipeline takeaway capacity out of the Williston Basin after relying for years on less efficient rail cars to move the crude to market.
When is it expected to start up?
Developers had hoped to start oil flowing by year’s end. But the project needs a key permit from the Army Corps to drill under Lake Oahe. The Obama administration promised to move “expeditiously” toward a “clear and timely resolution” on the permit, after which the company will need 90-100 days to install the pipeline under Lake Oahe plus a few weeks for testing. ClearView Energy Partners analysts now see the best-case scenario as a three-six months delay, while an extended delay or ultimate rejection remains possible.