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Court orders review of Dakota Access segment
NORTH DAKOTA
A federal court ordered the US government last week to conduct a full environmental review of a segment of Energy Transfer Partners’ Dakota Access pipeline. The court’s ruling came in response to a request by the Standing Rock Sioux tribe – which has long opposed the pipeline – to nullify federal permits for Dakota Access.
The Standing Rock Sioux had petitioned on the grounds that the US Army Corps of Engi- neers had violated the National Environmental Policy Act (NEPA) when it issued those permits in 2016 without conducting adequate environ- mental reviews. On March 25 the court ruled that “too many questions remain unanswered” about the Army Corps’ approval of the permits.
“Unrebutted expert critiques regarding leak-detection systems, operator safety records, adverse conditions and worst-case discharge mean that the easement approval remains ‘highly contro- versial’ under NEPA,” the court said in its ruling.
The court has remanded the Army Corps to prepare a full environmental impact statement (EIS) and to “brief the issue of whether the ease- ment should be vacated during the remand” and
oil can continue flowing through the pipeline. The Army Corps had defended its decisions in 2017, saying that granting the permit and right of way for Dakota Access on federally owned land did “not result in disproportionately high and adverse human health or environmental effects on minority populations, including tribes,
and low-income populations”.
Indeed, the permits had initially been denied
under former US President Barack Obama and subsequently reinstated under his successor, Donald Trump. An Earthjustice lawyer, Jan Has- selman, representing the tribe, said last week’s court decision showed that the Obama admin- istration had been “right to deny the permits in 2016”.
Dakota Access entered service in 2017 and now transports 570,000 barrels per day (bpd) of oil, or roughly 40% of output from North Dako- ta’s Bakken play. Energy Transfer is aiming to expand the pipeline’s capacity to 1.1mn bpd and is applying for the relevant permits. However, it may encounter legal challenges against the expansion plan.™
INVESTMENT
Apache calls in letters of credit to cover North Sea decommissioning payments
US-UK
HOUSTON-BASED Apache has announced it will call in letters of credit (l/cs) worth $650mn to guarantee its decommissioning payments in the UK North Sea.
The company recently announced it would slash its 2020 capital expenditure by around 37% in order to shore up its cash amid the oil market downturn. The producer is heavily invested in the US shale industry, where many operators are now struggling to break even following the sharp decline in prices.
Ratings agency Standard and Poor’s (S&P) said on March 26 it had downgraded Apache’s credit rating from BBB to BB+, with a negative outlook. In a statement on March 27, Apache said while the credit ratings serve “a valua- ble purpose,” it does not expect any impact on its “financial position, liquidity or business strategy.”
The company said it had a $2bn sub-limit for l/cs – guarantees from banks that a company is able to make payments – which could “easily accommodate the North Sea asset retirement obligation postings.”
Apache noted it had taken “aggressive actions” to shield its balance sheet and cash flow from the market turmoil, including a 54%
year-on-year reduction in upstream capital spending, representing a cut of $1.3bn. It has also cut its annual dividend by 90%, or $340mn, and aims to reduce its operating costs by $150mn. In addition, it has added significant near-term oil price hedges to protect cash flow.
The producer added it had a credit facility of $4bn up until 2024, provided by 18 banks. The downgrading from S&P will only “result in slight increase in borrowing cost on bank credit facil- ity,” it told investors in a presentation.
“Apache has ample liquidity and a very man- ageable bond maturity profile for the next five years,” CFO Stephen Riney said in a statement. “Together, these actions put us closer to a path for cash flow neutrality in the current price environment.”
Apache has been working in the UK North Sea since 2003, when it bought a 97% interest in the Forties oilfield. It went on to acquire more assets, including Beryl, from ExxonMobil, in 2011. The UK accounted for 12% of its produc- tion in 2018.
Apache was already hurting before the recent price collapse, booking a $3bn loss in the fourth quarter because of a $2.7bn charge on its assets.™
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w w w . N E W S B A S E . c o m Week 13 02•April•2020