Tag Archives: North Dakota Petroleum Council

Bakken Crude, Crude By Rail, Oil conditioning, Oil stabilization, Volatile gases

Big debate in North Dakota: stabilize the oil before shipping?

Repost from Prairie Business

 Does ND crude need to be stabilized?

By April Baumgarten, Forum News Service, August 25, 2014 
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A train carrying crude oil tankers travels on the railroad bridge over the Missouri River on Aug. 16 in Bismarck. Dustin Monke/Forum News Service

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.
Bakken Crude, Canadian regulation, Crude By Rail, DOT-111, Insurance Industry, Tank car retrofit, Volatile gases

Rightwing Canadian Thinktank: Bakken crude is safe, consumers will pay for unneeded regulation

Repost from The Waterloo Record, Kitchener, Ontario, Canada [Editor: It is instructive – although distressing – to take note of current talking points of the right-wing Canadian Fraser Institute.  – RS]

Consumers are the losers in rush to regulate oil by rail

Opinion, by Kenneth P. Green

In the wake of the 2013 Lac-Mégantic oil-by-rail disaster, when a train carrying crude oil from North Dakota’s Bakken field exploded in Quebec, some people began to characterize Bakken crude oil as “uniquely flammable,” implying that new rail car standards might be required to move the material.Indeed, the supposed uniquely flammable characteristics of Bakken crude was ultimately cited as a central reason for the recent Department of Transportation proposal to tighten railcar standards in the U.S., which Canada will almost certainly have to match given the integrated nature of the North American rail system.

There’s no question we must carefully consider the safety of how we move oil, whether by pipeline, rail, roadway or barge. But we should make those judgments based on data, not on emotion or hunches. We also need to consider the costs that such decisions might impose on consumers of oil and derivative products and services. And a recent study of Bakken crude commissioned by the North Dakota Petroleum Council reveals that Bakken crude is just regular crude oil that can be safely transported in existing rail cars.

The study sampled Bakken crude at 15 well sites across the Bakken formation, and at seven rail terminals, testing the oil for a broad range of physical characteristics.

To summarize the findings in plain language: Bakken crude is comparable to light sweet crude oil when it comes to its relative weight as compared to water, and it has very low levels of sulphur and corrosive acidic components. The vapour pressure of Bakken oil (a measure of how much outward pressure that Bakken oil would exert on a container such as a rail car) was found to be within a few pounds per square inch of other light sweet crude oils.

The flash point of Bakken oil (that’s the lowest temperature at which the oil could vaporize enough to ignite in air) was found to be below 73 degrees Fahrenheit, similar to other light sweet crudes. The initial boiling point (that’s the temperature at which bubbles form in a heated liquid) was found to be between 95 F and 100 F, which is also in the normal range for light sweet crude oil; and Bakken crude didn’t have unusually high concentrations of very light (and particularly flammable) hydrocarbons (known as “light ends”).

And, contrary to suggestions that there might have been additions to Bakken crude that would make it uniquely flammable, the study found no evidence that Bakken crude was “spiked” with more flammable natural gas liquids prior to being shipped by rail.

Finally, the report notes that: “… Bakken crude oil meets all specifications for transport using existing DOT-111 tank cars.” This conclusion is consistent with the recent American Fuel & Petrochemical Manufacturers Bakken Report, which stated: “Bakken crude oil does not pose risks significantly different from other crude oils or other flammable liquids authorized for rail transport. While Bakken and other crude oils have been classified as flammable liquids, the report noted Bakken crude poses a lower risk than other flammable liquids authorized for transport by rail in the same specification tank cars.”

The “uniquely flammable” narrative has driven the ongoing process to develop new rail-safety regulations, and new standards have been proposed in the U.S.

Retrofitting existing rail cars to meet the new standards is estimated to cost between $30,000 US and $40,000 US, and industry estimates suggest there are about 78,000 cars that need to be retrofit, at a total cost of $2.3 billion US to $3.1 billion US. Complying with the new regulations will increase costs of oil transport and, thus, the cost of oil, gasoline, derivative products and services provided through the use of those products for everyday consumers. It will also slow the trend of the shift to rail, at least in the short term, until retrofits can be worked through the system.

Some have suggested that the new standards might engender savings through reduced insurance rates, though this seems unlikely. In the wake of the Lac-Mégantic derailment, the United States Pipeline and Hazardous Materials Safety Administration effectively concluded that current insurance coverage levels were not simply low, they were drastically too low to cover potential costs of an accident. If anything, there will be still higher insurance rates issued to cover the more expensive cars, further reducing the economic viability of moving large quantities of oil by rail.

Adding to the complexity, there may not be sufficient resources in the rail-insurance sector to step up to the plate and offer more comprehensive coverage.

We may or may not be safer as a result of the proposed tank-car regulations, but it may be that the “uniquely flammable” narrative of Bakken crude has led us to focus on the wrong problem by tackling the material aspect of things before we’ve tackled the insurance side of the equation. Most likely, an integrated process tying both factors together would have yielded a superior outcome.

Kenneth P. Green is the senior director of natural resource studies at the Fraser Institute, an independent, right-of-centre think-tank.
Bakken Crude, DOT-111, Federal Regulation (U.S.), Light sweet crude, Oil stabilization, Volatility

Transp. secretary says ‘risk level is higher’ for Bakken crude transport

Repost from Dakota Resource Council
[Editor: Fascinating quotes from a variety of industry reps and North Dakota elected representatives, all scrambling to protect commercial interests.  They would like everyone to stop using the word “Bakken” to describe Bakken crude.  Wow, that should help a lot!  Secretary Foxx dances around the subject while maintaining the DOT’s finding that Bakken crude is more volatile and a higher risk.  – RS]

Transportation secretary says ‘risk level is higher’ for Bakken crude transport

By: Mike Nowatzki, Forum News Service, August 8, 2014

BISMARCK – U.S. Transportation Secretary Anthony Foxx said Friday that crude oil from North Dakota’s Bakken shale formation isn’t being singled out from other crudes in proposed new tank car standards, but he didn’t say definitively whether the Department of Transportation believes it’s more volatile than other light, sweet crudes.“

We’re seeing some light ends in the Bakken crude that suggests a higher level of volatility than we would see in typical crude,” Foxx said in a press conference after Friday’s meeting in Bismarck on national energy policy. “Of course, typical crude is a wide range of different, other types of crude.”

Earlier this week, industry representatives and members of the North Dakota Industrial Commission, including Gov. Jack Dalrymple, questioned why an analysis by the DOT’s Pipeline and Hazardous Materials Safety Administration singled out Bakken crude as being more volatile and riskier to transport than other U.S. crudes. A North Dakota Petroleum Council-commissioned study released Monday yielded similar data as the PHMSA study but found Bakken crude to be consistent with other types of light, sweet crude.

Dalrymple had said he planned to ask Foxx to explain, and the governor dove right into the topic when he took to the podium before Foxx during Friday’s Quadrennial Energy Review meeting at Bismarck State College.

“We are curious why the recent studies from the federal government have referred specifically to Bakken crude oil,” Dalrymple said to the crowd of more than 200 people at the National Energy Center of Excellence. “We think it’s important to classify crude oil by measurable characteristics” like vapor pressure and boiling point, “and not simply classify it by geographic source.”

Foxx told the audience that increased oil production in North Dakota — which now tops 1 million barrels per day — has led to a lot of DOT work on crude transportation. That work includes its crude testing program, Operation Classification, “which has showed us that the particular crude oil here finds itself on the higher end of volatility compared to other crude oils.”

“In addition to that, what we’re also finding is that because the oil is being transported over long distances, and in some cases in high numbers of trains back to back to back, that the risk level is higher than we have seen in some other parts of the country,” he said.

Last month, the DOT proposed enhanced tank car standards that would phase out the use of older DOT-111 tank cars for shipment of most crude oil within two years, Foxx said.

“And let me say specifically that we don’t single out Bakken oil from other oil,” he said.

Foxx said the DOT will continue researching crude characteristics.

Dalrymple said “we need to stop going around in this little circle about the word ‘Bakken,’” and noted the Industrial Commission will call a hearing, probably within the next month, to seek input on conditioning Bakken crude before storage and loading to try to lower its volatility.

Rep. Kevin Cramer, R-N.D., said a House oversight hearing is set for Sept. 9 in Washington, D.C., to review the industry report and “see just where Bakken crude falls in terms of characteristics.”

U.S. Energy Secretary Ernest Moniz also attended Friday’s meeting, the ninth of 11 meetings being held to help the Obama administration develop a national policy for energy infrastructure.

The administration is committed to an all-of-the-above energy strategy, and “North Dakota exemplifies that in so many ways,” Moniz said, noting he’d be driving by a wind-turbine farm on his way to tour the Great Plains Synfuels coal gasification plant near Beulah later in the day.

Moniz said it’s somewhat ironic that the nation is in an era of “energy plenty,” yet it’s developed so rapidly that infrastructure hasn’t had time to adjust, citing oil-by-rail challenges as one example.

U.S. Sen. John Hoeven, R-N.D., who sits on the Senate Committee on Energy and Natural Resources, said companies need regulatory certainty if they’re to invest in infrastructure such as pipelines and rail. He said U.S. oil production since 2009 is up 60 percent on private lands but down 7 percent on public lands.

“We’ve got to cut through these bottlenecks, the red tape,” he said, citing his proposed legislation to simplify regulations and give states primary responsibility to manage hydraulic fracturing, or fracking.

But among those who submitted public comments Friday were Dakota Resource Council members who called for a slowdown of oil permitting to allow natural gas gathering infrastructure to catch up and reduce flaring. North Dakota burned off 28 percent of its natural gas produced in May, according to a DOE memo.

Linda Weiss of Belfield, who serves as DRC board chairwoman and can see a gas flare about a quarter-mile from her home, said members also want more consideration given to landowners and planning to determine the best routes for pipelines and other infrastructure.

“They usually pit landowners against each other. They don’t do their due diligence to find the best route,” she said.

The volunteer ambulance service member also said more training is needed for emergency responders.

“What if something like Casselton or Quebec (happens)?” she said, referring to the derailment and explosion of train cars carrying Bakken crude that killed 47 people on July 6, 2013, in Lac-Megantic, Quebec, and the train derailment Dec. 30 near Casselton, N.D., that produced spectacular fireballs, but no injuries. “There is no way any of these small towns are prepared.”

Bakken Crude, Crude By Rail, Rail Safety, Reid vapor pressure levels, 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.