Repost from Prairie Business

 Does ND crude need to be stabilized?

By April Baumgarten, Forum News Service, August 25, 2014 

DICKINSON, N.D. – What can be done to keep trains from becoming “Bakken bombs?”

It’s a question on the minds of many North Dakota residents and leaders, so much that some are calling on the state Industrial Commission to require oil companies to use technology to reduce the crude’s volatility. The words are less than kind.

“Every public official in America who doesn’t want their citizens incinerated will be invited to Bismarck to chew on the commissioners of the NDIC for failing to regulate the industry they regulate,” Ron Schalow of Fargo wrote in a Facebook message.

A train carrying Bakken crude derailed and exploded July 6, 2013, in Lac-Megantic, Quebec, killing 47 people. Another oil train crashed into a derailed soybean train on Dec. 30 near Casselton, N.D. No one was killed.

Schalow has started a campaign to require oil companies that drill in North Dakota to use stabilizers, a technology used in Texas to take natural gas liquids off crude to make it safer to ship. His online petition demands the Industrial Commission to force oil companies to remove all explosive natural gas liquids from crude before shipping it by rail. More than 340 people have signed the petition as of Saturday.

Schalow declined an interview, referring instead to his petition and Facebook page titled “The Bomb Train Buck Stops With North Dakota.”

Throughout North Dakota, residents have called on the state’s government to prevent future disasters like these, but some leaders say implementing stabilizers could cause more problems.

“Now you have to pipe from every one of these wells or you have to find a way to get it to this centralized location to be refined,” state Agricultural Commissioner Doug Goehring said. “That creates huge problems in itself.”

There is a difference between conditioning and stabilization, said Lynn Helms, the state’s Department of Mineral Resources director.

Oil conditioning is typically done at well sites in North Dakota, he said. The gases are first removed from crude. Then the water and hydrocarbons are removed with a heater treater. The crude oil is then put into a storage tank below atmospheric pressure, which reduces the volatility. Those gases can then be flared or transported to a gas processing plant.

“If crude oil is properly conditioned at the wellsite, it is stable and safe for transportation,” Helms said.

Oil that hasn’t been properly conditioned at the wellsite can be stabilized, Helms said, but that would include an industrial system of pipelines and processing plants.

Valerus, a company based in Houston, manufactures stabilizers for oil companies across the country, including in Texas, West Virginia and Canada. It’s a technology Texas has used at the wellhead for drilling the Eagle Ford shale since the early 2000s, said Bill Bowers, vice president of production equipment at Valerus. Recently, a centralized system with pipelines has been developed to transport the natural gas liquid safely.

“Most of that stabilization takes place at a centralized facility now,” he said. “There could be 100 wells flowing into one facility.”

The Railroad Commission of Texas has one rule that Helms has found regarding stabilization, he said. Rule 3.36 of the Texas Oil and Gas Division states operators shall provide safeguards to protect the general public from the harmful effects of hydrogen sulfide. This can include stabilizing liquid hydrocarbons

.Helms added he could not find any other rule requiring companies to use stabilizers, but the rule had an impact indirectly, Bowers said.

“I think what was happening is these trucking companies, either for regulation or just safety purposes, would not transport the crude if it was not stabilized,” Bowers said.

The process is relatively simple, he added.

“All we are really talking about is heating the crude, getting some of the more volatile compounds to evaporate and leaving the crude less volatile,” Bowers said.

The Industrial Commission has asked for public input on 10 items that could be used to condition oil. Though stabilization is not directly listed, it could be discussed under “other field operation methods to effectively reduce the light hydrocarbons in crude.”

The commission will hear testimony on Tuesday, Sept. 23, at the Department of Mineral Resources’ office in Bismarck. Written comment may be submitted before 5 p.m. Monday, Sept. 22.

New rules in North Dakota would regulate conditioning at well sites.

The hearing was brought on by a study from the North Dakota Petroleum Council and discussions held with U.S. Secretary of Transportation Anthony Foxx and Secretary of Energy Ernest Moniz regarding transportation issues.

Installing equipment at the wellhead for conditioning oil takes several weeks, Helms said. Stabilization, on the other hand, could take more than a year to install equipment – if not longer.

Helms said he couldn’t comment on the economic process.

“I do know that a large-scale industrial process would have a big imprint,” Helms said. “It would really exasperate our transportation problems because tens of thousands of barrels of oil would have to be trucked or piped to (a processing plant) and from it.”

Since there is a centralized system in Texas, companies can make a profit off the natural gas liquids. In North Dakota, companies would have to stabilize at the wellhead before pipelines are put in place.

“Given their preference, they won’t buy this equipment,” Bowers said. “They really don’t want to do it.”

There is no pipeline infrastructure to transport natural gas liquids from wellsites, meaning it would have to be trucked or shipped by rail. That could be more dangerous than shipping oil without stabilizing it, Goehring and Helms said.

“By themselves, they are more volatile and more dangerous than the crude oil with them in it,” Helms said. “The logical thing to do is to properly condition them at the wellsite.”

The crude could also shrink in volume, along with profits, Bowers said.

“It seems to me that in the Bakken people are quite happy with the arrangement,” he added. “They don’t believe necessarily that stabilization will change the safety picture.”

Schalow has criticized the Industrial Commission for not acting sooner, stating officials have had 10 years to address the issue.

Goehring said he was made aware of the process recently.

“I don’t believe anybody is withholding information or is aware of anything, nothing diabolical,” Goehring said.

Officials agreed that the process needs to be dealt with on multiple levels, including oversight on railroad safety. Public Service Commissioner Julie Fedorchak outlined a proposal on Thursday for a state-run rail safety program. If approved, the Public Service Commission would hire three staff members for the program.

The commission has been working on the proposal since before the Casselton derailment.

“I share (Schalow’s) concern about having a safe method of transportation, and I think everyone does,” Fedorchak said. “How we get there is the challenge and I think there is a number of different steps. I don’t think there is one solution.”

Many trains carrying Bakken crude travel through Fargo, where Schalow and Democratic Sen. Tim Mathern live.

Mathern follows Schalow’s Facebook page and said he did so out of his concern for transporting oil safely.

“My perspective is that we must preserve and protect our quality of life today and in the future,” Mathern said. “We must be careful that we don’t do kind of a wholesale of colonization of our resources in sending them out. … It’s almost like how do we make sure that we don’t have an industrial waste site as a state?

“In many of our larger cities, we have a section of town that is kind of an industrial waste site. Eventually, someone has to clean that up. Eventually, that is a cost to society, and I am concerned that we don’t let that happen to North Dakota.”

Mathern said safely transporting oil is no longer a western North Dakota or even a state issue; it’s a national issue that must be taken seriously because the oil is being transported throughout the country.

“There is enough responsibility to go around for everybody, including policy makers,” he said. “It’s not just one industry; it’s many industries. It includes the public sector. It includes governors and legislators, and people that are supposed to be attentive to citizens, and to be attentive to the future. We all have responsibility in this.

“This has worldwide consequences. This is an oil find that even affects the balance of power, even politically.”

Mathern said he doesn’t know what Schalow’s motivation is, but it isn’t just Schalow raising the questions.

“I don’t think this is a matter of blaming oil.” Mathern said. “This is a matter of being respectful for our citizens and being a good steward of this resource and a good steward of our future.”

Public comment

Residents unable to attend the North Dakota Industrial Commission on oil conditioning practices set for 9 a.m. on Tuesday, Sept. 23, in Bismarck may submit written comments to brkadrmas@nd.gov. Comments must be submitted by 5 p.m. CDT on Monday, Sept. 22.