By September 28, 2016 Read More →

Tribal service deals could help Dakota pipeline impasse – Whiting CEO

 Federal regulators are expected to rule soon on whether the pipeline’s construction can proceed

By Ernest Scheyder


Dakota Access Getty Image photo by Alex Wong.

SAN FRANCISCO (Reuters) – The chief executive of North Dakota’s largest oil producer, Whiting Petroleum Corp , says the standoff over the $3.7 billion Dakota Access pipeline could be solved by giving economic opportunities, including supply and delivery contracts, to the Standing Rock Sioux and other Native Americans.

Thousands of protesters from all over the world have joined with the Sioux to oppose the pipeline, which would transport oil within half a mile of tribal land in North Dakota. Federal regulators temporarily blocked construction of the pipeline earlier this month under the Missouri River, mollifying opponents but irking the fossil fuel industry.

The Standing Rock Sioux say the pipeline’s construction would destroy tribal burial sites. They also worry that any future leaks would pollute their water supply.

Jim Volker, Whiting’s CEO, said those concerns would be best addressed through economic opportunities, including contracting with American Indian-owned firms for water hauling and otheroilfield service needs across oil-producing regions.

“We as an industry like to see them provide those services,” Volker said in an interview on the sidelines of the Independent Petroleum Association of America’s OGIS conference in San Francisco.

“It does provide a better standard of living for them. It does provide a direct tie to the energy business and makes them and their tribal leaders more inclined to want to have more energy development.”

When fully connected to existing lines, the 1,100-mile (1,770 km) pipeline would be the first to carry crude oil from the Bakken shale directly to the U.S. Gulf. The project is being built by the Dakota Access subsidiary of Dallas-based Energy Transfer Partners LP.

Contracts between Native American-owned firms and oil and natural gas producers are not uncommon on reservations. Indeed, the MHA Nation, whose members live on a reservation in western North Dakota where about a third of the state’s crude is pumped, requires oil producers operating on their land to contract with American Indian-owned businesses.

But the requirement cannot apply outside the reservation’s borders and many oil companies, Whiting included, do not have oilfield service and supply contracts with a large number of Indian-owned firms.

Dave Archambault II, chairman of the Standing Rock Sioux, said he appreciated the suggestion from Volker, but that his opposition to the pipeline has little to do with economics.

“It’s going to be very difficult for us to allow this line to come through just because some indigenous-owned company may benefit,” Archambault said in an interview. “If this pipeline goes through, we will be the first to pay the cost.”

Dakota Access first contacted the Sioux about the pipeline in October 2014 and continued reaching out to the tribe through March 2016, according to a report from the U.S. Army Corps of Engineers.

Volker, who has worked at Whiting for more than 30 years, said he was sensitive to the tribe’s concerns that construction of the Dakota Access pipeline would disturb ancestral burial sites and other historical areas.

“I wouldn’t want necessarily a pipeline to go through the cemetery where all my relatives are buried,” he said.

But he added that he expects the situation to be resolved by November. “I’m pretty sure there will be a pretty good resolution to this.”

Volker called a move last week by the owners of the Dakota Access pipeline to buy more than 6,000 acres of land adjacent to the line’s route a “pretty good move.” Federal oil pipeline regulators do not have authority over private land and cannot block construction on it.

“It just increases the odds that things get done,” he said.

The Dakota Access pipeline would, if finished, help North Dakota oil producers transport their product to refiners and other customers cheaper and faster.

Volker said he estimates the pipeline would cut the differential for North Dakota oil – that is, the extra cost needed to get the oil to market due to its distance – from about $8.50 per barrel to around $5.50.

Federal regulators are expected to rule soon on whether the pipeline’s construction can proceed, though the Standing Rock Sioux and environmental groups have vowed to oppose it.

(Editing by Matthew Lewis)


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