Oil Companies Fined For Mislabeling Crude Shipments

Repost from Huffington Post / Reuters

U.S. Oil Companies Fined For Mislabeling Crude Shipments In First Move After Series Of Derailments

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In this Dec. 30, 2013 file photo, a fireball goes up at the site of an oil train derailment in Casselton, N.D. (AP Photo/Bruce Crummy, File) | ASSOCIATED PRESS

By Patrick Rucker
WASHINGTON, Feb 4 (Reuters) – Three oil companies operating  in North Dakota were fined $93,000 on Tuesday for wrongly  classifying fuel shipments in the first sanctions since a series  of fiery derailments put the energy industry under a spotlight.

The Department of Transportation said Hess Corp,  Marathon Oil Corp and Whiting Petroleum Corp   were cited for wrongly classifying cargo tanks that were hauling  crude oil from the field to a railhead.

Fuel shipments must be designated with a hazard class to  alert emergency responders in the event of an accident. Eleven  of eighteen samples of one survey were mislabeled, the DOT said  in a statement.

“The fines we are proposing today should send a message to  everyone involved in the shipment of crude oil: You must test  and classify this material properly,” said Transportation  Secretary Anthony Foxx.

A spate of explosive derailments, including one in Quebec  last July which killed 47 people, has led to concerns over the  safety of shipping crude oil by rail and improper labeling.

Officials have already warned that some fuel found in North  Dakota’s energy patch, the Bakken, could be more volatile and  explosion-prone than other crude oil and that shippers should  take precautions.

Typically, crude oil carries a ‘hazard class 3’  classification and can be shipped in a standard tank car. The  shipments are further assigned a ‘packing group’ to alert to  dangers – that portion of the shipping paper was faulty, the DOT  said.

While the DOT’s Pipeline and Hazardous Materials Safety  Administration (PHMSA) has been testing crude samples for months  and issued several industry warnings, Tuesday’s action is the  first sanction.

Phmsa Administrator Cynthia Quartersman said the fines  reflected “initial findings” and that officials would scrutinize  the corrosivity, pressure and other traits of Bakken crude.

The DOT did not specify which companies would be expected to  pay what share of the $93,000 fines but by any measure the sums  were small for large energy companies.

Officials from Hess and Marathon could not immediately be  reached for comment.

Jack Ekstrom, a spokesperson for Whiting, said that the  company had not yet been contacted by the DOT about a possible  fine.