Page 9 - NorthAmOil Week 04 2021

NorthAmOil PIPELINES & TRANSPORT NorthAmOil

Court ruling delivers mixed

fortunes for Dakota Access

US A US federal appeals court declined this week to after it had already started up. If it is ultimately
shut down the Dakota Access pipeline, operated shut down, this could set a worrying precedent
by Energy Transfer, but upheld a ruling from a for other pipeline operators with infrastructure
lower court retroactively throwing out a decision already in existence.
that had allowed its construction. Dakota Access entered service in 2017, hav-
The three-judge panel ruled that the US ing been revived by former US President Don-
government should have conducted an envi- ald Trump after his predecessor, Barack Obama,
ronmental impact assessment before allowing denied a permit for the project. It has a capacity
the pipeline to proceed, and vacated easements of up to 570,000 barrels per day, and there is also
granted for its construction to cross federally a proposal to nearly double its capacity to 1.1mn
owned land. The judges ordered the US Army bpd. The pipeline carries oil from North Dakota
Corps of Engineers, which had granted the ease- to Illinois, and has provided an important outlet
ment allowing for the pipeline’s construction to for the Bakken play, which had been struggling
be completed, to conduct the outstanding envi- with takeaway capacity shortages prior to its
ronmental assessment. start-up.
Despite this, the federal appeals court did not Native American tribes opposed to Dakota
agree with a federal district court’s decision that Access have a pending request with a lower court
the pipeline should be shut down. It left the deci- to issue a new shutdown order under a different
sion on the pipeline’s future to the Army Corps. legal standard. In addition, tribes and environ-
Under these circumstances, the pipeline’s mentalists are pushing new US President Joe
future remains uncertain, and there is potential Biden’s administration to exercise its authority
for both further agency action and additional to pause operations on Dakota Access. But while
litigation. Other pipeline operators will likely be Biden has cancelled the cross-border permit for
following the matter closely, given that Dakota the Keystone XL, he has not yet given any sign
Access is in the unusual position of facing closure that he will try to shut down Dakota Access.™

INVESTMENT

Enerplus to buy Bruin in Bakken bet

WILLISTON CALGARY-BASED Enerplus announced debt from its balance sheet.
BASIN this week that it had agreed to buy Bruin E&P While the deal has some differences com-
HoldCo. for $465mn. Privately owned Bruin is pared to other recent shale M&As, there are
a pure-play company focused on the Williston also similarities. Like its peers, Enerplus sees
Basin in North Dakota, which is known for oil the acquisition as a means of improving scale at
production from the Bakken and Three Forks a time when shale drillers are focused on fiscal
plays. discipline and improving returns.
Most recent shale mergers and acquisitions The acquisition includes around 151,000 net
(M&As) have focused on the Permian Basin in acres (611 square km) in the Williston Basin,
Texas and New Mexico, so Enerplus’ Bakken-fo- including 30,000 net acres (121 square km) that
cused acquisition stands out. It is also unusual are contiguous with Enerplus’ Tier 1 acreage
compared to other recent deals because Ener- position in the region. Bruin’s output is currently
plus said it would pay in cash, funded with a new around 24,000 barrels of oil equivalent per day
$400mn term loan and a concurrent $115mn (boepd), and it has 84mn boe of proven plus
bought deal equity financing. By contrast, the probable (2P) reserves, as well as an inventory
majority of recent US oil and gas M&As have of 149 drilling locations – or 111 on a net basis –
involved all-stock deals. including drilled but uncompleted (DUC) wells.
Enerplus will also not take on any of Bruin’s Including the output it will gain through the
debt as part of the acquisition. However, Bruin acquisition, Enerplus expects to deliver 2021
managed to eliminate most of its debt by enter- production of 103,500-108,500 boepd, including
ing Chapter 11 bankruptcy protection last year. 63,000-67,000 barrels per day (bpd) of liquids.
When it emerged in September, it had elimi- Its capital spending in 2021 is expected to be
nated more than $840mn of nearly $1.1bn of CAD335-385mn ($261-301mn).™

Week 04 28•January•2021 www. NEWSBASE .com P9