Repost from Railway Age

North Dakota seizes initiative in CBR degasification

The vital other shoe in crude by rail reform will drop not in Ottawa or Washington, but in Bismark, N.Dak., where, in the void created by federal inaction, officials are preparing to use state jurisdiction over natural resources to order the degasification of petroleum at the wellhead.

The initiative follows months of opaque pronouncements by federal regulators in both Canada and the U.S. with respect to the need to render volatile crude oil safe before transport by rail.

A spokesman for Pipeline and Hazardous Materials Safety Administration (PHMSA) told Railway Age that rules for the pre-loading treatment of crude oil for shipment by rail are not on its reform agenda, despite earlier, apparently overly enthusiastic, pronouncements.

While Transport Canada and the U.S. Department of Transportation have responded to the succession of oil train explosions this year and last by focusing on railroad operations, hazmat classification, and tank car design, some have been muddled on the need to treat the volatile cargo itself before its loading into railcars—this despite their own warnings that crude, fracked from the mid-continent Baaken shale formation, has the explosivity of gasoline.

Some oil producers and shippers have resisted any new regulatory requirement that they process crude for transport by rail the way they already must for delivery by pipeline.

Removal of toxic, explosive, and corrosive gases from crude for transport by pipeline has been required for years under the regulatory authority of the PHMSA. But neither PHMSA nor its DOT sibling Federal Railroad Administration have seen fit to require similar treatment—variously termed “degasification”, “conditioning”, “stabilization”, or “normalization”—for crude, destined for shipment by rail.

Crude shippers have complained since the first oil train calamity in July 2013 at Lac-Mégantic, Quebec, that PHMSA regulations for testing and classifying oil for transport by rail were imprecise. Such confusion is only augmented by PHSMA’s twice-stated reference to a purported “requirement” that dangerous gases be removed before crude is loaded into railcars.

The most recent such PHMSA pronouncement in a June 11, 2014 letter to the National Transportation Safety Board reiterated an earlier safety alert:

“On Jan. 2, 2014, PHMSA also issued a safety alert warning of the flammability of the crude oil extracted from the Bakken Shale region in the United States. PHMSA noted that the alert reinforces the requirement to properly test, characterize, classify, and where appropriate, sufficiently degasify hazardous materials prior to transportation.”

Railway Age asked the PHMSA media relations office to clarify the requirement to “degasify,” and to cite the underlying legislative or regulatory authority. A PHMSA spokesperson researched the inquiry and responded that there was in fact no such legal basis in existence or under formal consideration. The PHMSA spokesman referred us to North Dakota, which was contemplating the introduction of compulsory degasification.

Indeed, the oil and gas division of the North Dakota Industrial Commission has announced a public hearing for Sept. 23, on the “oil conditioning practices” in the state’s three light-oil pools: Bakken, Three Forks, and Sanich. Oil producers are invited to propose “methods to effectively reduce the light hydrocarbons in crude oil.”

Division spokesperson Alison Ritter told Railway Age, “The hearing is a first step in conditioning the oil to make it as safe as possible for transport.” She said that gas/liquid separators are already required at all North Dakota wellheads. At issue is whether they are being effectively used to render so-called “hot crude” safe for rail transport.

Separators boil off light hydrocarbons such as ethane, butane, and propane from crude oil, reducing its vapor pressure and propensity to explode. Heavy and corrosive hydrogen sulfide is also removed for pipeline transport. None of this is compulsory for shipment by rail.

North Dakota had been an uncritical booster of CBR even after Lac-Mégantic, until the fourth of the conflagrations occurred Dec. 30, 2013, on the outskirts of Casselton, when a westbound BNSF grain train derailed in the path of an eastbound BNSF oil train.

North Dakota is also proceeding with the training and deployment of its own rail inspectors, who will enforce FRA and PHSMA regulations within the state.