BISMARCK, ND - The Dakota Access Pipeline has been under scrutiny for months now, and a recent report by The Institute for Energy Economics and Financial Analysis (IEEFA) is bringing the pipeline company's finances and economics into question.
The report claims that Dakota Access has contract deadlines with nine shippers and if those contract clauses aren't met, the shippers could back out and the project would have to be canceled. The pipeline company disputes those claims.
The full 10-page report titled "The High-Risk Financing Behind the Dakota Access Pipeline" says that the project faces a January first completion deadline. Failure to meet that deadline could trigger a reset with shippers who can renegotiate contracts signed two years ago with the developer, Energy Transfer Partners.
"The circumstances in which this project was first proposed in which the contracts were signed have dramatically changed and there seems to be much less rationale for this pipeline than there originally was," said Cathy Kunkel, IEEFA author.
Kunkel says her claims come from this court document submitted by the Vice- President of Dakota Access, which says that Dakota Access has committed to complete, test and have DAPL in service by January one 2017.
The contracts give shippers the right to determine their commitments if DAPL is not in full service per the contract deadline. Loss of shippers to the project could result in project cancellation.
In an email from Energy Transfer Partners they responded saying: "January first, 2017 deadline was their original in-service target, and that is not the contract deadline mentioned in the court documents."
Clark Williams-Derry is one of the co-authors of the report. He says they project production in the Bakken to drop to 800,000 barrels a day by the end of 2017.
Clark Williams- Derry, IEEFA Author, "When you subtract out the refineries and the rail we believe there is existing capacity on pipelines to handle the likely volumes the Bakken will be producing."
Ron Ness with the North Dakota Petroleum Council disagrees. He says the pipeline is critical and that the council doesn't expect production to drop below 900,000 barrels a day.
"We anticipate growth in the Bakken going forward and pipelines like the Dakota Access Pipeline provides the most safest, most reliable cost effective way to move oil and it gets it to a better market," said Ron Ness, North Dakota Petroleum Council.
Ness also added that having the pipeline would take pressure off the rails.
Kunkel and Williams- Derry says that Phillips 66, Hess, Tesoro and Oasis Midstream have signed contracts with Dakota Access.