The offices of SPO Partners, the largest investor in prospective DAPL oil supplier Oasis Petroleum, are located in Shelterpoint Business Center along Highway 101 in Mill Valley, CA.

According to Energy Transfer Partners Executive Vice President Joey Mahmoud, nine oil companies have contracts to supply the Dakota Access Pipeline. They all expire on January 1, 2017.

Mahmoud made this assertion in a sworn declaration to the US District Court for Washington, DC this past August 18th.  In oil industry jargon, the pipeline suppliers are known as “shippers.”

If the shippers decline to renew their contracts, in other words, it will significantly add to the financial stress facing the project.

“The long-term transportation contracts give shippers a right to terminate their commitments if DAPL is not in full service per the contract deadline,” Mahmoud told the court.

The pipeline certainly will not be “in full service” by the New Year, particularly after the Army Corps of Engineers denied Dakota Access, LLC – the corporate consortium building DAPL – an easement to drill under Lake Oahe on December 4th.

As I explored in an October story for the North Bay Bohemian, one of the nine likely DAPL shippers is probably Oasis Petroleum of Houston, Texas, which controls more than 400,000 acres within the Bakken and Three Forks oil basins of North Dakota and Montana.  The company’s largest investor is a $5.4 billion hedge fund based in Marin County named SPO Partners.

Earlier this month, The Institute for Energy Economics and Financial Analysis and the Sightline Institute released a groundbreaking study concerning the financial stress confronting DAPL, called The High-Risk Financing Behind the Dakota Access Pipeline.

Clark Williams-Derry, one of the study’s authors, agrees that Oasis Petroleum is probably contracted to supply oil to DAPL,  Oasis Petroleum — and, by extension, SPO Partners — face a stark choice about whether to renew their contract with the pipeline, he says.

“If Oasis Petroleum has made a financial commitment to the pipeline, as it appears they have, it certainly raises questions about their complicity in the pipeline company’s egregious behavior toward the Water Protectors,”  Williams-Derry, who is research director of the Sightline Institute, told me. “The moral pressure is on them to decide whether they are to be a party to Dakota Access’ actions.”

Oasis Petroleum recently completed construction of a 19-mile oil transmission system from its North Dakota petroleum handling facility to a DAPL “tie in,” thus positioning it to supply roughly one-ninth of the pipeline’s estimated 470,000 barrels of daily crude oil deliveries, records with the North Dakota Public Service Commission show. The same transmission line also connects to a Tesoro oil-by-rail facility.

It is difficult to know for certain which companies are DAPL shippers.  Few of them have divulged this information publicly.  In addition to Oasis, the following seven companies are also likely DAPL shippers:

  • Phillips 66
  • Tesoro
  • Tess Oil Company
  • Rose Rock Energy
  • Conoco-Phillips
  • Shell
  • XTO Energy (subsidiary of Exxon-Mobil)

Cautionary note: Energy Transfer Partners spokespeople — who have a less than sterling record of telling the truth — have claimed in media statements that the shipper contracts don’t actually expire on January 1st, contradicting their own executive vice president’s sworn court testimony.

Marin Hedge Fund is Largest Investor in One of DAPL’s Likely Suppliers
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