All posts by Roger Straw

Editor, owner, publisher of The Benicia Independent

Oil field developer proposes to strip Bakken crude of volatile natural gas liquids

Repost from EnergyWire, E&E Publishing
[Editor: Two significant quotes: “We’re not really taking a position on the tank car rule.  All we’re saying is, in making the rule, please consider what’s going in the car in addition to the car itself.” and “‘Right now, they [American Petroleum Institute] are kind of the lone soldier among the players involved here saying volatility isn’t an issue.  Everyone else is saying, “We know it’s an issue — now we have to figure out how we solve it.”‘”  Well, one way to solve it is to leave the stuff in the ground and invest in renewable energy.  Duh.  – RS]

Oil groups line up at White House over tank car standards

Blake Sobczak  |  E&E News  |  Tuesday, June 10, 2014

Quantum Energy Inc. claims to have no position on proposed oil tank car standards — yet the oil field developer stopped by a White House office last week to discuss them anyway.

Russell Smith, Quantum’s executive vice president of public affairs, said he met with the small but influential Office of Information and Regulatory Affairs to make sure regulators knew about the company’s plans for “stabilizing” hot-to-handle crude from North Dakota’s Bakken Shale play.

Bakken crude has earned a volatile reputation after a string of oil train derailments and fires. A 72-car oil train jumped the tracks and exploded in downtown Lac-Mégantic, Quebec, last July, killing 47 people and prompting regulators to warn that Bakken crude may be less stable than other types.

The deadly crash also set the stage for the “comprehensive” oil-by-rail rulemaking package now weaving its way through OIRA, part of the Office of Management and Budget. White House records show several oil companies, refiners and industry groups have met with administration officials and transportation regulators to shape new standards for the type of DOT-111 tank car long faulted for its puncture-prone design.

“We’re not really taking a position on the tank car rule,” said Smith, who attended June 2’s meeting with lobbyists from FTI Consulting, OIRA representatives and Department of Transportation regulators. “All we’re saying is, in making the rule, please consider what’s going in the car in addition to the car itself.”

Smith’s company hopes to set up “21st-century energy centers” in North Dakota’s Williston Basin capable of stripping the most volatile natural gas liquids out of Bakken crude before the commodity is loaded onto rail cars.

Oil producers have contested claims that Bakken crude is more volatile than other types, and the North Dakota Petroleum Council has conducted tests that it says show the crude is safe (EnergyWire, May 21).

Last month the oil industry’s top lobbying group, the American Petroleum Institute, met with OIRA to air its views on tank car rules that could have a big impact in the Bakken, where well over 600,000 barrels of oil leaves the state daily by rail (EnergyWire, May 28). API said in a later statement that it is “critical” that the proposed rule should “achieve measurable safety improvements by using science and data to address accident prevention, mitigation and response.”

Since then, several refiners, chemical companies and trade groups, including the American Chemistry Council and the American Fuel & Petrochemical Manufacturers (AFPM), have also met with OIRA about the tank car rules.

AFPM has conducted its own study of Bakken crude volatility and concluded even older-model DOT-111 rail tank cars can safely handle the oil, although the refining group detected Reid vapor pressure levels as high as 15.4 pounds per square inch (absolute) in some samples.

Reid vapor pressure offers a good indication of flammable gas content in a liquid such as crude. While 15.4 psi is well within even the oldest DOT-111 tank cars’ safe pressure capacity, AFPM said in its survey of Bakken crude characteristics that vapor pressures of 10 psi or lower “are in the best interests of AFPM members.”

Smith said Quantum intends to strip Bakken crude down to a Reid vapor pressure of 6 psi or lower and sell the separated gas liquids. The Tempe, Ariz.-based holding company also hopes to set up five micro-refineries modeled after a new joint project run by MDU Resources Group Inc. and Calumet Specialty Products Partners (EnergyWire, April 11, 2013). Once completed, that diesel facility will mark the first new refinery built in the United States in nearly 40 years.

“Since we’re stabilizing [Bakken oil] upstream of our refineries, our refineries will actually be receiving ‘stripped’ crude,” Smith said. “With a reasonably small increase in investment, we could be capable of stripping every drop of oil coming out of the Bakken.”

The API said in a statement that “NGL removal is among the topics being considered by the experts who are developing with [the Pipeline and Hazardous Materials Safety Administration’s] participation the new standard for classifying, handling, and transporting crude by rail, and API intends to review their work on the issue before taking a position.”

API has repeatedly emphasized that Bakken crude poses no greater risk than other light oil varieties, a position Smith called “short-sighted.”

“Right now, they are kind of the lone soldier among the players involved here saying [volatility] isn’t an issue,” Smith said of API. “Everyone else is saying, ‘We know it’s an issue — now we have to figure out how we solve it.'”

Blake Sobczak

Reporter, EnergyWire

202-446-0400 (p)

202-737-5299 (f)

@BlakeSobczak (Twitter)

Environment & Energy Publishing, LLC

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About Quantum Energy, Inc.

QUANTUM ENERGY, INC. is a development stage, publicly traded, diversified holding company with offices in Williston, North Dakota. Quantum places an emphasis in refinery development, land holdings, oil and gas exploration, drilling, well completion and fuel distribution


    Governor’s Oil by Rail Report Highlights Need for Sustainable Funding and Close Coordination to Protect Public Safety

    Repost from California Department of Fish & Wildlife
    [Editor: This is a major, highly significant report from the Governor’s Rail Safety Working Group.   The recommendations aren’t nearly as strong as needed, but they’re a step in the right direction.  Download the Governor’s Report, OIL BY RAIL SAFETY IN CALIFORNIA.  See the Governor’s Office of Emergency Services announcement.  See also coverage in ReutersSFGate, Huffington Post.   – RS]

    Oil by Rail Report Highlights Need for Sustainable Funding and Close Coordination to Protect Public Safety

    June 10, 2014 by Janice Mackey

    Large Increase in Oil by Rail Points to Need for Long-Term Solutions

    In an effort to prepare state and local emergency responders for the dramatic increase in shipments of oil by railroad in California communities, the state Interagency Working Group on Oil by Rail Safety today released a report outlining its recommendations to improve public safety during the transport of oil by rail in California.

    “Keeping California’s residents and environment safe from oil spills from rail deliveries, pipelines, or marine shipments is a top public safety priority,” said Mark Ghilarducci, Director of the California Office of Emergency Services. “Implementing these recommendations will bolster a growing array of prevention, response and regulatory efforts.”

    State energy officials estimate that crude oil imports by rail will increase from 1 percent of total California oil imports in 2013 to 25 percent of imports by 2016. Most of the increase is due to a sharp rise of imports from Canada and North Dakota in the Bakken shale formation.

    In response, Governor Edmund G. Brown Jr. included proposals in his budget to prepare the state for the influx of oil by rail, including increasing safety inspections of railways by the Public Utilities Commission and establishing an inland oil spill preparedness and response program.

    “Californians recognize that moving oil can be a dangerous business,” said California Department of Fish and Wildlife Director Charlton H. Bonham. “Enhancing the programs we have in place will give Californians the confidence they need to know that any movement of oil in this state will be done in the safest manner possible.”

    The report details 12 main recommendations:

    • Increase the number of California Public Utilities Commission rail inspectors;
    • Improve emergency preparedness and response programs;
    • Request improved identifiers on tank placards for first responders;
    • Request railroads to provide real-time shipment information to emergency responders;
    • Request railroads provide more information to affected communities;
    • Develop and post interactive oil by rail map;
    • Request the federal Department of Transportation to expedite phase-out of older, riskier tank cars;
    • Accelerate implementation of new accident prevention technology;
    • Update California Public Utilities Commission incident reporting requirements;
    • Request railroads provide California with broader accident data;
    • Ensure compliance with industry voluntary agreement;
    • Ensure state agencies have adequate data.

    Several state agencies engage in prevention, planning, emergency response, and cleanup activities applicable to oil by rail, including the Office of Emergency Services (OES), the Office of State Fire Marshal (OSFM), California Environmental Protection Agency (CalEPA), and the Office of Spill Prevention and Response (OSPR). Local agencies, including the local Certified Unified Program Agencies (CUPAs), also play critical roles in emergency preparedness and response, and have expressed growing concern about increased oil by rail transport.

    In addition to administration’s budget proposal, state officials are updating California’s emergency response programs, including the CalEPA Emergency Response Management Committee revising the Hazardous Material and Oil Spill annex of the State Emergency Plan and OES reviewing and updating the six Regional Plans for Hazardous Materials Emergency Response.

    The report is the product of an intensive 6 month effort by multiple state agencies, including the California Public Utilities Commission; California Office of Emergency Services; California Environmental Protection Agency; Department of Toxic Substances Control; California Energy Commission; California Natural Resources Agency; California Office of the State Fire Marshal; Department of Oil, Gas and Geothermal Resources; and Office of Spill Prevention and Response.

    View the report:
    Visit the web page:


      Attorney General Confirms CBE Concerns over Chevron Refinery

      News Release from Communities for a Better Environment
      [Editor: Read the June 9 news release here, or  download the release.  And… Read the Attorney General’s letter to the Richmond Planning Dept.  – RS]

      Attorney General Confirms CBE Concerns over Chevron Refinery

      June 9, 2014

       A CBE News Release – A.G. Kamala Harris cited refinery safety, air pollution, and climate protection concerns with Chevron’s proposed Richmond refinery expansion—the same concerns raised by CBE.

      Urging the City of Richmond “to revise the EIR so that it will fully inform the public and the City Council of the local and statewide impacts of this Project,” Attorney General Kamala Harris cited refinery safety, air pollution, and climate protection concerns with Chevron’s proposed Richmond refinery expansion—the same concerns raised by Communities for a Better Environment (CBE) last month.

      The Attorney General’s June 6th comment letter identified at least five issues that need further evaluation in the Environmental Impact Report (EIR) for the Chevron Expansion (“Modernization”) Project:

      • Safety hazards of the proposed project;
      • Potential project impacts on statewide climate protection objectives;
      • disparately impacted local community;
      • Feasible measures to cut local air pollution; and
      • Reasonable alternatives that may be environmentally superior to the project as currently proposed.

      Specific concerns Harris raised include, among others, increased safety hazards from refining higher sulfur oil, increased carbon emission intensity, and the reliance on ‘emission reduction credits’ that do not require emission reductions in the communities directly affected by the proposed project’s potential air pollution.

      CBE called on the City to revise and recirculate Chevron’s draft EIR, in comments documenting these same concerns submitted May 2, 2014. Last week CBE challenged air quality officials’ action granting a permit for the project without any valid air quality or environmental review. The Richmond Planning Commission has scheduled a decision on the project and EIR for a public hearing on July 9, 2014.

      Download the June 9th press release
      Read the Attorney General’s letter to the Richmond Planning Dept.