A high-stakes battle is underway on multiple front lines across America, as Native American and climate change activists square off against oil and pipeline companies racing to lay as much infrastructure into the ground as quickly as possible.
The U.S. oil industry is enjoying a surge in production, which has shot up 86 percent since 2008. Unshackled by Congress and enabled by the most oil-friendly president in decades, the industry aims to transform the American landscape with tens of billions of dollars in new pipelines, storage depots, and export terminals.
That includes the Dakota Access pipeline, scene of the yearlong protests at the Standing Rock Sioux Reservation, which is slated to begin transporting oil this weekend.
Yet despite oft-repeated claims by politicians and oil executives about the danger of relying on foreign oil, this U.S. petroleum renaissance never was designed to make America energy self-sufficient: A growing amount of that oil will end up in China, Japan, the Netherlands, even Venezuela.
U.S. Rep. Kevin Cramer, R-N.D., a climate change skeptic and prominent booster of the Dakota Access and Keystone XL pipelines, boasts that oil from North Dakota’s massive Bakken shale formation is now “destined for the world.”
This building and production binge already has made the United States the world’s third-largest producer of crude, behind Russia and Saudi Arabia. The current U.S. output of 9.3 million barrels a day is more than Iran and Iraq’s production combined. Oil production in the U.S. might break records next year. The number of drilling rigs is nearly double that of a year ago.
All of this was unthinkable a decade ago when the shale revolution turned parts of North Dakota and Texas into mega producers of oil with hydraulic fracturing or fracking. Then, at the end of 2015, Congress lifted the 40-year ban on exporting American crude oil.
“We have the potential to produce all we need and then some,” Cramer said. Speaking broadly of the continent, including Canada and Mexico, he added, “I view us as a North American energy bloc that rivals if not exceeds, the global market potential of OPEC.”
The boom has generated political and economic pressure to build massive new infrastructure to get the product to market. Cramer said that includes the means for moving oil to coastal refineries and on to export terminals.
In the year after the export ban was lifted, companies across the U.S. added some 24 million barrels of storage, according to a U.S. Energy Information Administration analyst. Private equity investment in the first quarter of 2017 was near $20 billion, nearly triple that of a year earlier, most of it for pipelines and tank farms, the analyst said. In the same period, commercial banks freed up $370 million in loans for more drilling.
In all, nearly 32,000 miles of North American pipelines are planned or under construction, according to Pipeline & Gas Journal’s 2017 Worldwide Construction Report.
The rush to drill and build comes at a pivotal time for U.S. energy policy, too. Demand for oil is flattening here and renewable energy sources are becoming economically viable, even as U.S. commitments in the Paris climate accords are under threat. The buildout takes place even as some oil companies recognize the threat posed by global warming.
“Climate change may adversely affect our facilities and our ongoing operations,” states a 2014 Phillips 66 report to the federal Securities and Exchange Commission. “The potential physical effects of climate change on our operations are highly uncertain.”
Yet pressed by investors’ demands for quarterly profits, the companies keep building – while they still can.
Oil companies “have seen the writing on the wall,” said Lena Moffitt, director of the Sierra Club’s Beyond Dirty Fuels campaign. The oil industry is “racing to lock in continued demand for the product via this infrastructure (to) get these fossil fuels to our coasts as fast as possible.”