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WDEA Supports DAPL Optimization

Nov 13, 2019

Dakota Access LLC has filed an application with the Public Service Commission to expand the capacity of the Dakota Access Pipeline. The project involves the addition of a pumping station that would be housed inside a building on a 22-acre site about five miles west of Linton. The addition of five 6,000 horsepower electric motors will nearly double the capacity of the pipeline, allowing it to move up to 1.1 million barrels per day.

The Western Dakota Energy Association, which represents North Dakota cities, counties and school districts impacted by energy development, strongly supports this DAPL optimization project for several reasons:

North Dakota crude oil is most often shipped to refineries by pipelines and train to be turned into gasoline, diesel, jet fuel, heating oil, and other petroleum products essential to modern society. Pipelines are the safest and most efficient method of transporting crude oil, so it makes sense that we move as much as possible through a pipeline. And because DAPL came online only two years ago in 2017, it is built to the strictest requirements and transports oil in the most environmentally sound and safest means possible. 

Pipeline transportation is also the most efficient method of transportation and it reduces the discount on North Dakota crude. This means the state’s producers get a higher price for their oil, benefiting the industry, royalty owners, and state taxpayers. This additional tax revenue helps to address ongoing needs in western North Dakota communities through funding for infrastructure, schools, law enforcement, fire protection and other services. Additional oil tax is dispersed statewide through state general, tax relief, budget stabilization, strategic investments, lignite research, state disaster relief, municipal infrastructure, county and township infrastructure, and airport funds.

An often-overlooked benefit of DAPL optimization is the property tax. Pipeline valuation is based on a combination of the actual value of the infrastructure itself, as well as the income that it generates. If the DAPL pipeline is moving a greater volume of oil, its valuation will go up, resulting in additional property tax revenue collection in counties the pipeline crosses. The pipeline has paid over $12.7 million in property taxes from 2014-2018 and is projected to pay $6.7 million in property taxes in 2019. These tax dollars are used to support schools, hospitals, emergency services and other critical ongoing needs.

Numerous other factors also support this project – competitiveness with other worldwide oil formations, job creation, economies of scale, and minimizing loss. WDEA addressed some of these factors and submitted comments to the PSC in support of the project.
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