AP: Dakota Access Will Support $110M Increase In Annual Tax Revenue

A new analysis by The Associated Press finds that North Dakota will gain over $110 million annually in tax revenue after oil begins flowing through the Dakota Access Pipeline. The $3.8 billion pipeline, which is set to come online later this month, will provide a safer, cost efficient avenue for Bakken drillers to ship product to key refining markets in Illinois and the Gulf Coast.

North Dakota in the past decade has become the second-biggest oil producer in the United States, behind Texas. But its location in the northern Plains, far from major oil markets, means less profit on each barrel of oil. North Dakota lowers its tax on each barrel to keep its crude competitive with other states.

Much of North Dakota’s oil is shipped by truck or train. The 1,200 Dakota Access pipeline would carry the oil through South Dakota and Iowa to a shipping point in Illinois. It could shave shipping costs by more than $3 a barrel, according to Ron Ness, president of the North Dakota Petroleum Council. State tax officials estimate every dollar saved means about $33.6 million in added tax revenue each year.

In addition to oil tax revenue, the Dakota Access Pipeline also stands to generate upwards of $55 million annually in property taxes, including $10 million in North Dakota. “It’s going to benefit schools and counties and more valuation means lower property tax bills for everybody,” said North Dakota tax commissioner Ryan Rauschenberger.


Environmental Fears Over DAPL Overblown

The Dakota Access Pipeline (DAPL) is more than just a pipeline. It is a political hot potato. There are a lot of issues underlying the DAPL conversation, including indigenous peoples’ access to ancestral lands, environmental concerns of a potential spill, water rights, and social justice.

One false assumption is that rejecting the DAPL would result in fossil fuels staying in the ground. The lack of a pipeline has not stopped growth in oil production from the Bakken shale formation yet. This oil is currently transported by rail or road, where it has a significantly higher chance of spillage, explosion or tragedy. Higher prices will be passed on to consumers, a regressive policy that inordinately affects the poorest citizens.

Climate change activists have also entered the fray. Anti-fossil fuels advocate Bill McKibben said the pipeline couldn’t pass “a climate test” and the Center for Biological Diversity has made DAPL a touchstone of its aggressive climate campaign. Wouldn’t it be great to see the numbers behind the rhetoric?

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Dakota Access Ensures Costs Remain Low For North Dakota Producers

In an article published in Bloomberg Businessweek, recently reviewed energy and economic analyses point to a significantly reduced cost to ship petroleum by pipeline rather than by railroad or truck. This is important because those few dollars difference in cost to energy companies directly relates to the opportunities for companies to expand operations and hire individuals from engineers to craft trades to develop the infrastructure necessary to develop North Dakota resources.

According to the article, “[u]nlike Texas, which has pumped oil for more than a century and is home to thousands of miles of pipelines, North Dakota never had a reason to build much energy infrastructure. As oil gushed out of remote areas miles from any town or pipeline, wildcatters, middlemen, and traders raced to get it out by truck, train, and barge. By 2015, 800,000 barrels of crude a day was being railed out of North Dakota. Moving oil by train costs a lot more than pumping it through a pipeline, but when world crude prices hovered around $100 a barrel—as they did for several years—there was enough profit to go around. Now that prices have fallen, those transportation costs have become critical. Refineries on the East Coast, once among the biggest buyers of Bakken crude, have reverted to importing foreign oil rather than paying to ship it halfway across the country.”

Despite the massive production available in North Dakota, the high cost of transportation has actually led some American refiners to import foreign oil, rather than use domestic supplies, because of the economic realities.

The key to closing that cost gap and reducing dependence is to construct the infrastructure necessary to make North Dakota oil economically viable for the long-term future. An important part of that infrastructure investment is the Dakota Access Pipeline.

According to data compiled from Valero and Bloomberg Intelligence, current costs to ship Bakken oil to refineries across the United States by rail can range as high as $10 per barrel – at roughly $50 per barrel, that’s 10% of the total price. The estimated cost of delivery of a barrel moved by the Dakota Access pipeline would fall to about $5 per barrel, creating long-term stability for producers, refiners, and ultimately, consumers.

With the development of the Dakota Access Pipeline, transportation costs would essentially be reduced by half. Imagine if you could shave 5% off the cost of a gallon of gas, and ensure that the gallon of gas wasn’t supporting a foreign government. Not only that, but by reducing the cost of transportation, opportunities for production increase allowing more North Dakotans the opportunity to work. Right now North Dakota’s major oil producing counties support on average approximately 10% of the state workforce, and that’s with only 38 oil and gas rigs operating in November of this year. Compare that to more than 200 rigs back in 2014.

Lean operation has made production more efficient, but reducing costs for producers allows for greater development and greater economic opportunity.


Dakota Access Pipeline Part Of Transportation Solution, American Energy Independence

In a recent article from the Dickinson Press, North Dakota oil production has surpassed last year’s record and is now nearing half a million barrels per day according to a report from the Associated Press and confirmed by North Dakota state officials and industry officials. In fact, the current production in the state has already surpassed 113 million barrels produced in 2010.

A record 204 drilling rigs were operating in the western region of North Dakota this past week, nearly all are drilling on the Bakken and Three Forks formations, precisely the same region of production where the Dakota Access Pipeline will originate.

Right now in eastern Montana and North Dakota the daily capacity to move oil out of the region is 773,000 barrels, including 438,000 barrels by pipeline and 335,000 barrels by rail. Added pipeline capacity, through the construction of the Dakota Access Pipeline which will transport  470,000 barrels per day, will more than double the current take away, help free up rail capacity, and grow our country’s ability to extract our own energy resources while on the path to full energy independence.


Pipeline Reduces Odds of Oil Train Derailment

 

The buildout of safe, efficient pipeline infrastructure is redefining how our nation’s domestic energy resources are delivered to critical markets across the nation. A recent article published in the Ottumwa Courier highlighted a growing concern we are all too familiar with – concerns with the safety of oil trains. From the devastating 2013 tank car explosion in Quebec to last month’s oil train derailment in Oregon, it is clear that shipping crude oil resources by rail can be concerning. As noted by the Courier, Iowa is far from immune to these risks with millions of barrels of oil transiting the state’s railways ever year.

Not surprisingly, crude-by-rail shipments top Ottumwa Assistant Fire Chief Mike Craff’s list of concerns involving rail transportation. In an interview with the Courier, Craff, who is also the vice president of the Iowa State Hazmat Task Force, said cleaning up a derailment involving crude would a mess. “If one of those catches on fire we pretty much have to let it burn out,” he said.

Adding to concerns is an April 2016 report by the Iowa Department of Transportation that found a state-wide lack of preparedness for a derailment involving crude oil or ethanol.

In Iowa, the Dakota Access Pipeline will transport over 450,000 barrels of oil per day or nearly half of the Bakken’s current production. The pipeline will significantly reduce crude-by-rail traffic in our region, meaning the odds of a derailment involving oil are also drastically cut.