Easy resolution unlikely for contentious Dakota pipeline

[September 19, 2016]  By Catherine Ngai and Ernest Scheyder

NEW YORK/CANNON BALL, NORTH DAKOTA (Reuters) - A potential rerouting of a long-anticipated pipeline at the center of a protest in North Dakota would be a laborious and costly task, possibly delaying a startup by months and provoking further opposition from Native American and environmental groups who were instrumental in halting construction.

The 1,172-mile (1,886 km) Dakota Access pipeline was slated to start up by the end of the year, transporting more than 470,000 barrels per day of crude oil through four states into Illinois before it hooks up to another pipeline down to Texas.

But in a stunning twist last week, the U.S. Justice Department and other federal agencies intervened to delay construction in what industry and labor representatives called an "unprecedented" move.

The halt on the $3.7 billion project was the result of a groundswell of protest from Native American tribes and environmentalists, some of whom now are vowing to continue the fight until the project is permanently suspended.

While there are a few options for rerouting the line, most still cross either culturally important lands to Native Americans or large waterways. The more extensive a reroute, the more likely it is that regulatory obstacles crop up.

"We're entering unchartered waters if a reroute happens at this stage and I can't think of another example of a case where this has happened," said Afolabi Ogunnaike, a senior analyst at consultancy Wood Mackenzie. "Should a reroute take place, there are some major challenges."

North Dakota's governor, Jack Dalrymple, told Reuters on Friday that he hoped regulators would give the go-ahead for construction to resume shortly. If that does not happen, an alternative solution does not appear to be easy to come by.

Energy Transfer Partners <ETP.N>, the company constructing the line, declined to comment. It had said it is committed to completing the project.

The protest is concentrated in Cannon Ball, North Dakota, near Lake Oahe, a large and culturally-important reservoir located on the Missouri River in central southern North Dakota, where the line was supposed to cross.

The U.S. Army Corps of Engineers now needs to decide whether it correctly followed the National Environmental Policy Act (NEPA) and other federal laws. If they did not, the permit process may need to be restarted, which could take at least 120 days. It is unclear when the NEPA review will be finished.

The other option -- rerouting the pipeline -- also presents substantial challenges. The surrounding land where the pipeline could cross has a number of national parks or wetlands, commercial and residential uses, or Native American reservations.

An early proposal involved sending the pipeline from the Bakken shale, where more than a million barrels of oil is produced daily, a bit further north and crossing the Missouri north of the state capital of Bismarck. The current crossing is about 30 miles south of the state capital. http://tmsnrt.rs/2cqkRJ7

"Knowing that the destination of the pipeline is to the east and looking at where the majority of the oil is sourced from, at some point, you have to cross the Missouri River," said Eric Hansen, director of environmental services at Westwood Professional Services, a surveying and engineering firm that works in North Dakota.

Protesters demonstrate against the Energy Transfer Partners' Dakota Access oil pipeline near the Standing Rock Sioux reservation, in Los Angeles, California, September 13, 2016. REUTERS/Lucy Nicholson

Activists have said they will continue their protest, fearing damage to the water supply in the event of a leak, though there are many pipelines in the United States that carry fuel under waterways.

"No one can live without water. We just want this to stop. We won't leave until it does," said Valerie Eagle Shield, a member of the Standing Rock Sioux tribe, the Native American tribe whose lands would be directly affected.

Energy Transfer Partners preferred the more southerly route eventually decided upon because it was 11 miles shorter and would have less impact on the land, according to a U.S. Army Corps environmental assessment from July. It also cost $23 million less than the first proposed pipeline route.

The path with fewest obstacles, experts say, is even further north, heading from the small town of Stanley, located in the Bakken, due east, avoiding the Missouri River altogether.

However, that would require substantial changes and new state and federal permits, and would make it difficult to gather oil from the Bakken, which is not an issue for the current pipeline path. The state and federal regulatory review for the current pipeline took more than two years, according to North Dakota officials.

"A permitting process is quite complicated," Hansen said. "As they come up with alternatives, they'll have similar issues to face and re-permitting for any reroutes."

In addition, winter is coming, which will make construction a challenge if the situation is not resolved.

Meanwhile, protesters, emboldened by their success, are prepared to take their opposition into the cold winter months, while locals in a section of the line in Iowa are also stepping up their pressure.

"This is a large issue, and why expedite it when we have to sit down and consider the ways to move forward. Why rush?" said Dave Archambault II, chairman of the Standing Rock Sioux Tribe, in Fort Yates, North Dakota.

(Additional reporting by Valerie Volcovici in Washington; Editing by David Gaffen and Edward Tobin)

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