Repost from National Public Radio (NPR) [Editor: This NPR report mentions that recent new North Dakota regulations require “conditioning” the oil. Note that the new rules fall short of calling for “stabilization” of the oil. See Ron Schalow’s comment, including “This conditioning lowers the ignition temperature of crude oil—but not by much. It leaves in solution most of the culprit gases, including butane and propane….The only solution for safety is stabilization, which evaporates and re-liquefies nearly all of the petroleum gases for separate delivery to refiners. Stabilization is voluntarily and uniformly practiced in the Eagle Ford formation in Texas…” – RS]
Fiery Accident Spurs Safer Rail Transport For Crude Oil
Morning Edition, December 30, 2014
It’s been one year since an oil train derailment outside Casselton, N.D. Since then, state and federal regulators have taken steps to make it safer to transport crude by rail.
Benicia>>It was a busy year for Benicia as residents responded to drought and budget problems challenging their way of life.
Faced with the potential loss of 85 percent of their water supply, Benicians were forced to conserve and pay more for water from other sources.
Meanwhile, residents approved a sales tax measure to forestall further budget cuts. They also passed school district bond measure to fix aging classrooms.
The city also managed to adopt a mater plan for its long-awaited downtown waterfront park and complete a $3 million park-and-ride project funded by bridge tolls.
Here’s a look back at some of Benicia’s top stories of 2014:
• More so than any other Solano County city, Benicia was hit hard by the state’s ongoing severe drought. The city’s dicey water situation is related to the State Department of Water Resources’ decision in January to halt State Water Project deliveries to millions of residents. Normally, that’s where Benicia gets 85 percent of its water.
In response the shortage, the city cut its water use by more than 20 percent, exceeding the statewide average of 6.7 percent. In addition to implementing outdoor water restrictions, the City Council also approved a drought surcharge to pay for added costs, such as purchasing water from other communities to meet demand.
In the coming year, the city is expected to look for ways to increase the reliability of its water supply to avoid future shortages.
• Faced with ongoing budget problems, voters overwhelmingly passed a 1 cent sales tax to maintain city service levels. City officials argued the extra revenue — projected to reach $3.7 million annually — was needed to maintain “quality of life” services such as police and fire and parks and recreation. The city has trimmed 12 percent of its workforce since 2008 to make ends meet.
• In June, voters passed a $49.6 million Benicia Unified School District bond to fund facility improvement at several campuses. It is the first district improvement measure in 17 years, following three failed parcel tax attempts.
• The Valero Benicia Refinery’s proposed rail terminal project continued to fuel debate over crude-by-rail safety issues. If approved, the project would allow Valero to import up to 70,000 barrels of Bakken or Canadian tar sands oil daily by train.
In June, the city released the project’s environmental impact report, leading to packed public hearings over the summer. People as far away as Roseville attended to voice opposition or support for the project, which would increase oil train traffic through the Sacramento Valley.
The city also received letters from state and local officials — including State Attorney General Kamala Harris — criticizing the project safety analysis as inadequate. The city is in the process of responding to those and other comments.
Meanwhile, the project has sparked a debate on whether Mayor Elizabeth Patterson’s public statements about crude-by-rail issues would prevent Valero from getting a fair hearing. In October, Patterson — an outspoken advocate of tougher oil-train safety measures — revealed the city had advised her not to participate in any decisions on Valero’s pending permit. Patterson, however, has challenged that advice, defending her right to speak openly about public safety issues related to the transportation of crude oil by train.
• Following years of planning, the city adopted a waterfront park master plan in October. The Urban Waterfront Enhancement and Master Plan is meant to guide the development of a waterfront park along the Carquinez Strait between First Street and the marina. In the coming year, the city is expected to seek funding for design and engineering phases estimated to cost $6.7 million.
• Hoping to make life easier for bus riders, the city completed transit stop improvements on Military West between West K Street and Southampton Road.
The project followed the completion of similar improvements on Military West near City Park last year. The projects cost $3 million and were funded by bridge tolls.
Both stops are served by SolTrans Route 78, which links the Vallejo ferry terminal to BART in Contra Costa County.
• The city has also moved forward with joining Marin Clean Energy to give residents another option for power source. Benicians will be given a six-month opt out period to give a chance for them to stay with Pacific Gas and Electric. There will be a one-time fee for those who decide to opt out afterward. According to staff reports, The city could also receive between $40,000 to $80,000 annually as its solar power credits by utilizing the clean energy source. The current MCE rates are lower than those of PG&E’s, though both rates could fluctuate in the future.
Staff writer Irma Widjojo contributed to this article.
New Law Gives Emergency Planners Oil By Rail Information
Monday, December 29, 2014, Amy Quinton / Capital Public Radio
Smoke rises from railway cars that were carrying crude oil after derailing in downtown Lac Megantic, Quebec, Canada, July 6, 2013. Credit: Associated Press
A new law that goes into effect Jan. 31 in California requires railroads to give more information to emergency planners about crude oil shipments.
Local and state emergency responders say they are given very little detail about the movement of trains carrying crude oil.
A 2013 Bakken crude oil train explosion that killed 47 people in Quebec raised awareness of the danger that poses.
Kelly Huston with the California Office of Emergency Services said with the predicted increase in the amount of imported crude oil, more information is needed.
“Being able to know what’s coming and then being able to prepare for it and take actions that may be needed whether it’s moving hazardous materials crews or whether it is, perhaps we know about an event that’s going on in a highly populated area and we would want to make sure the railroad is aware of that,” Huston said.
Under the new law, railroads will have to submit weekly schedules of trains, and the volumes of crude oil they carry. They would also have to set up a communications center for first responders and give local authorities access to emergency plans.
The California Energy Commission has estimated nearly a quarter of the oil imported into the state will be delivered by rail by 2016.
“It’s not only having the knowledge but also how we use that knowledge to both prevent an accident from occurring and then having adequate hazardous materials resources and first responder resources to respond in the event there is an accident,” Houston said.
Bakken outlook: Oil industry faces hurdles in 2015
By Mike Nowatzki, Dec 26, 2014
Brothers Dusty, left, and K.C. Sutton of Nine Energy Service prepare to install a blow out preventer on a new well on July 7 south of Stanley that has been fracked and needs to be cleaned out before it produces oil. FNS Photo by Michael Vosburg
BISMARCK — With oil prices slipping to their lowest point in more than five years, new state regulations slated to take effect and lawmakers proposing major investments in oil country, 2015 is shaping up to be a critical year for the oil and gas industry in North Dakota.
Here’s a look at some of the top issues.
New rules resonate
Rules adopted by the North Dakota Industrial Commission in 2014 will continue to resonate in 2015.
Gas capture goals adopted in July will require operators to reduce the percentage of natural gas flared from oil wells to 23 percent by Jan. 1 and to 15 percent by 2016.
Statewide, operators already met the first goal of 26 percent by Oct. 1, beating it by 4 percentage points.
But eight individual operators didn’t meet the gas capture goal, and several postponed completion work on wells to achieve the goal, Department of Mineral Resources Director Lynn Helms said.
North Dakota Petroleum Council President Ron Ness said substantial amounts of gas are being “held hostage” in negotiations over pipeline easements. He estimated well over one-third of the flared gas is the result of three or four easement hang-ups on private, tribal and federal lands.
“Those few bottlenecks are holding up a substantial amount of connections,” he said.
Oil conditioning required
Starting April 1, oil conditioning rules adopted by the Industrial Commission this month will require operators to use equipment to separate butane, propane and other volatile gases from crude oil, and to run the equipment within certain temperatures and pressures to lower the oil’s vapor pressure to 13.7 pounds per square inch.
State officials say the rules will improve the safety of crude-by-rail shipments. Critics contend they’ll do little to prevent the kind of explosive train derailments that spurred their creation.
Ness said the Petroleum Council was amenable to safety standards based on science but “we adamantly objected to the micromanagement” maintained in the final order. Some companies will have to make substantial investments in well-site equipment and testing required by the rules, he said, noting one operator believes their cost could range from $10 million to $20 million.
Requiring the equipment to be installed during the winter months so it’s ready by April 1 also was “a significant misstep,” he said.
“Operators are already in the process of figuring out what they need to do on each of their facilities to come into compliance, but I think we’re pretty frustrated with the process,” he said.
Price uncertainty high
Continued lower oil prices will make some drilling activity less profitable in emerging and mature oil plays, but prices are expected to remain high enough in 2015 to support new drilling in the major shale areas in North Dakota and Texas, the U.S. Energy Information Administration said in its short-term energy outlook Dec. 9.
The outlook forecasts average spot prices of $68 per barrel for Brent crude and $63 per barrel for West Texas Intermediate crude in 2015, with lower prices early in the year, the EIA said, citing “high uncertainty” in the price outlook.
Helms is optimistic prices will recover, calling the recent decline “a blip.”
Ness said the industry doesn’t see it that way, noting most analysts are predicting the price slump could last eight to 16 months or even one to two years as U.S. supply stays strong, global demand remains weak and OPEC continues to challenge U.S. production.
“We don’t know what the new normal for oil prices is going to be,” he said. “We’re in an energy war.”
North Dakota light sweet crude oil has dropped below $40 a barrel.
And while some barrels are hedged, “by and large, we’re probably taking $60 less a barrel than we were six months ago,” Ness said.
As a result, companies will deploy less capital and idle drilling rigs or move them from fringe areas to higher-producing areas, he said.
If low prices continue into February and March, “We’re going to see substantial reduction in exploration activity,” he said.
Helms said falling oil prices, oil conditioning and flaring reduction were factors in North Dakota’s drilling rig count dropping by 10 to 183 as of Dec. 12. He expects a 40- to 50-rig reduction by mid-2015 because of soft oil prices.
Oil tax reform?
Efforts to change North Dakota’s oil tax structure failed during the 2013 legislative session, and it remains to be seen whether similar proposals will surface when the Legislature convenes Jan. 6.
Sen. Dwight Cook, R-Mandan, chairman of the Senate Finance and Taxation Committee, introduced a bill last session that would have ended a series of 10 tax incentives designed to help draw oil companies to the state and keep them viable, while lowering the oil extraction tax from 6.5 percent to 4.5 percent for wells built after 2017. The bill failed in the House, as did an oil tax reform bill sponsored by Rep. Roscoe Streyle, R-Minot.
“I will not be introducing any similar legislation this session, and I haven’t heard of anybody else who has,” Cook said Tuesday. “But I guess I wouldn’t be surprised to see something.”
Trying to get rid of incentives – including reductions and exemptions to the extraction tax that take effect when the price of crude drops below a “trigger price” for five consecutive months – could be a tough sell with oil prices as low as they are, Cook said.
“You need to do that when there are high prices,” he said.
Ness said the Petroleum Council doesn’t plan to push any oil tax reform legislation.
“We fully expect that we’re going to sit back and utilize those incentives if they come,” he said.
Legislative proposals
Elected leaders have unveiled big spending proposals to address infrastructure, housing and other needs in oil-impacted areas of western North Dakota.
Chief among them is Gov. Jack Dalrymple’s budget recommendation to increase the share of oil production tax revenue being sent back to oil producing counties from 25 percent to 60 percent for the 2015-17 biennium, while lowering the state’s share from 75 percent to 40 percent. Senate Majority Leader Rich Wardner, R-Dickinson, is spearheading a similar proposal.
The adjusted formula would generate $1.7 billion for the counties and their political subdivisions, or $1 billion more than what the region is expected to receive this biennium, Dalrymple has said.
The governor also wants lawmakers to fast-track $873 million in “jump-start” funding so the state’s oil and gas region can get a head start on construction projects next spring. He’s also recommending $119 million in Energy Impact Grant funds.
Radioactive waste
Several illegal dumping incidents reported in 2014 focused attention on proper disposal of filter socks and other radioactive oilfield waste.
The North Dakota Department of Health has proposed rules that would increase the limit of radioactivity from 5 picocuries per gram to 50, allowing companies to dump the waste at special oilfield waste landfills and industrial waste landfills instead of having to haul it out of state. Companies also would be required to keep manifests to track the waste.
A public comment period is open until Jan. 31, and the approval process is expected to take several months. The Legislature’s Administrative Rules Committee must approve the rules.
“That’s going to get a lot of discussion,” Cook said.
