Category Archives: Volatile gases

‘Micro refineries’ a solution to oil-train woes, energy firm says

Repost from Reuters in The Jamestown Sun

‘Micro refineries’ a solution to oil-train woes, energy firm says

By Reuters Media Today

WASHINGTON – A handful of small refineries in North Dakota could remove dangerous gas from oil train cargoes and make shipments from the state’s productive Bakken shale area safer on the tracks, according to a company which has pitched the idea to regulators.

The proposal from Quantum Energy Inc would strip propane and other volatile gas from North Dakota crude and send much of the remaining fuel to distant refineries.

Williston, North Dakota-based Quantum hopes to build five “micro refineries” near railheads already handling Bakken crude to strip about 100,000 barrels a day of fuel from that stream.

Some of the resultant gas could add to household fuel supplies in the upper Midwest while making Bakken-origin rail cargoes safer, Quantum’s executive vice president Russell Smith told Reuters.

“Our plan solves a couple of important problems,” said Smith, who earlier this month pitched the idea in meetings with White House officials and Transportation Department regulators mulling oil train safety.

Besides light fuels, Smith said, the Quantum facilities would also pull a stream of diesel gasoline from Bakken sources to help slake demand in the region. Executives hope to have permits and financing to break ground on at least one of the proposed refineries before year-end.

The company expects that each processing center would cost about $500 million.

A spokesman for the U.S. Department of Transportation said officials could not comment on their deliberations about oil train safety or meetings with industry.

In the coming weeks, though, officials are expected to outline measures to improve oil train safety such as demanding tougher tank cars, slower speeds and diversions around urban centers.

Several oil cargoes from North Dakota’s Bakken have exploded during rail accidents in the last year. Some officials say toughened tank cars should be used to move such fuel.

Regulators have homed in on the vapor pressure of Bakken fuel, one index of the explosion risk.

Industry-funded tests of Bakken fuel have returned vapor pressure readings of 15 pounds per square inch on the commonly-used Reid scale, while Quantum Energy believes it could bring that reading below 6 psi, similar to fuels like ethanol and heavy crude.

“The crude is much less volatile once you take these light tops off,” said Smith, referring to the gassy share of Bakken fuel.

Some oil industry officials, though, see little need to reduce vapor pressure in oil train cargoes and think Quantum might have misjudged demand for gas.

“There will be a market for propane, potentially in North Dakota, but what about the other components they’ll be removing?” said Kari Cutting, vice president of the North Dakota Petroleum Council.

Pentane, butane and other light gases are not easily marketable in North Dakota currently and may have to be shipped to buyers such as far-off chemical plants in tank cars fit to carry dangerous gas.

Smith said Quantum expects to find buyers that would welcome the portion of Bakken fuel not marketed close to the source. The Bakken field extends into Montana and Canada’s Saskatchewan and Manitoba provinces.

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    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

    bsobczak@eenews.net

    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 www.quantum-e.com.

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