Enbridge's Sandpiper Pipeline Looks Uncertain After Investment in Bakken Pipeline

The controversial and long-delayed Sandpaper oil pipeline project in northern Minnesota is at a standstill after Enbridge and Marathon announced its big investment in a different pipeline project, the Bakken Pipeline that will transport crude from North Dakota to Illinois.

Enbridge announced late Tuesday that it will purchase a $1.5 billion stake in the Bakken Pipeline System while Marathon will purchase a $500 million stake. Both companies have stated their plans to terminate their joint venture agreements for the Sandpiper pipeline once the Bakken Pipeline is complete.

The $2.6 billion Sandpiper pipeline would run from the Bakken oil fields through Minnesota but has gone through several delays due to opposition from environmentalists and aboriginal groups. It has been under regulatory review for over two years, and its future is now uncertain.

Because the Bakken Pipeline approvals are complete and operation is expected to begin by end of 2016, Enbridge and Marathon view the Bakken Pipeline to be a quick cash flow producing replacement for what analysts think will be a deferred Sandpiper pipeline.

On top of a new investment in Bakken Pipeline, the low prices staggering through the oil industry with no sign of a big rebound anytime soon decreases the need for Sandpiper, according to Scott Strand, head of the Minnesota Center for Environmental Advocacy.

“For now, it’s very hard to see the economic case for doing [Sandpiper],” he said.

Star Tribune