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NorthAmOil PIPELINES & TRANSPORT NorthAmOil

MPLX warns

of impact from

potential Bakken

pipeline shutdown

NORTH DAKOTA MPLX, the master limited partnership (MLP)
formed by Marathon Petroleum in 2012 to focus
on midstream assets, has flagged up the financial
impact of a potential shutdown of two pipelines
serving the Bakken play. This comes as both the
Dakota Access pipeline, in which MPLX has a
9% indirect interest, and the Tesoro High Plains
pipeline, which it fully owns, are facing legal
obstacles that could potentially result in their
shutdown.
MPLX’s executive vice-president and chief
financial officer, Pamela Beall, said on the com-
pany’s second-quarter earnings call that in the
event that both pipelines were shut for “any year, is appealing against the ruling. The pipe- An appeals court
period of time”, the MLP anticipated a maxi- line, which carries less than 100,000 bpd of oil, overturned the order
mum impact to its pre-tax earnings of less than remains operational in the meantime. to shut Dakota Access
$100mn per year. on August 5, but a
A US federal judge ordered the closure of Permian progress legal battle over the
Dakota Access in July, ruling that a compre- The company has also provided an update on permit that allowed
hensive environmental review had not been the planned pipelines it is involved in that would the pipeline to be
conducted during construction. Dakota Access’ carry oil and gas from the Permian Basin to the completed continues.
majority owner, Energy Transfer, is appealing US Gulf Coast.
against the judge’s order, and has claimed that MPLX and its partners are planning to bring
shutting down the pipeline could up to $7.5bn the Wink-to-Webster crude pipeline into service
in losses for companies, workers and the state in the first half of 2021, with the Whistler natural
budget in North Dakota alone between now and gas pipeline anticipated to follow in the second
2021. half of that year.
The company noted that project financing
Some analysts have questioned these num-
Dakota Access bers, arguing that they are based on Bakken for the Whistler pipeline had been secured in
is the largest oil production expectations that are no longer the second quarter of this year. This had already
pipeline carrying realistic given the collapse in crude prices and been factored into MPLX’s reduced 2020 growth
demand earlier this year. Nonetheless, Dakota capital target, it noted.
crude out of the Access is the largest pipeline carrying crude out MPLX abandoned a Permian natural gas
of the Bakken, with a capacity of 570,000 barrels liquids (NGLs) pipeline, known as BANGL, in
Bakken, with per day (bpd), and some producers are holding May owing to the collapse in crude prices at the
off on bringing back curtailed output in the play end of the first quarter. However, Beall said that
a capacity of amid uncertainty over its fate. in an effort to continue supporting customers,
An appeals court overturned the order to MPLX had formed a joint venture with White-
570,000 barrels shut Dakota Access on August 5, but a legal bat- Water Midstream and West Texas Gas to provide
per day (bpd). tle over the permit that allowed the pipeline to NGL takeaway capacity from MPLX and West
be completed continues. A new environmental Texas Gas processing plants in the Permian to
assessment for Dakota Access may be required, Sweeny, Texas. The joint venture will largely use
and a further decision from US regulators over existing infrastructure, thus requiring limited
whether the pipeline can keep operating. initial construction.
Tesoro High Plains, meanwhile, was also MPLX reported second-quarter 2020 net
ordered to shut down in July after the US Depart- income of $648mn, compared with net income
ment of the Interior’s (DoI) Bureau of Indian of $482mn for the same quarter of 2019. The
Affairs unexpectedly ruled that the pipeline was company said it was on track to reduce its 2020
illegally trespassing on Native American land. capital spending by over $700mn, and operating
MPLX, which acquired the pipeline system last expenses by around $200mn.™

Week 31 06•August•2020 www. NEWSBASE .com P13