Tag Archives: Oil stabilization

Bakken Crude, Crude By Rail, Oil stabilization, State regulation, Volatility

Small North Dakota town editorial calls for strong oil safety standards

Repost from The Jamestown Sun, Jamestown, ND
[Editor: Significant quote: “An oil conditioning standard must be framed in the broad context of public safety, not what might or might not inconvenience the industry. The ‘winners’ must be homeowners, businesspeople and others who live near oil train rail lines.”  – RS

Flexibility in oil rule has limits

By Forum Editorial Board on Nov 5, 2014 

“Flexibility” has emerged as the operative word in a proposed crude oil conditioning standard being developed by the North Dakota Department of Mineral Resources. Director Lynn Helms said he is summarizing some 1,200 pages of comment and testimony about how best to prepare volatile Bakken crude for transport. All well and good, but just how flexible “flexibility” will be should be a primary concern.

The drive to “condition” Bakken crude that is transported in rail tank cars accelerated following several derailments and explosions of oil trains, including a spectacular collision/derailment and explosion near Casselton, N.D., last December. Three reports about characteristics of Bakken crude are in the public record and will play a part in Helms’ work.

The aim is to remove certain volatile components of North Dakota’s light crude oil, thus making it less likely to flash to flame and explode in a train accident. Helms said his department will propose a standard to the Industrial Commission next month. The means by which the industry meets the standard likely will include various operating practices. The commission imposes the rule. Good, as far as it goes.

Helms added that his department’s flexibility approach is the best way to go because, “We certainly don’t want at this point … to pick a winner or loser in that discussion.” Really?

Once again, Helms and company are so focused on the industry’s priorities that his view of “winner or loser” is constricted. An oil conditioning standard must be framed in the broad context of public safety, not what might or might not inconvenience the industry. The “winners” must be homeowners, businesspeople and others who live near oil train rail lines. The means to achieve a meaningful oil safety standard could be flexible, but only if procedures can achieve the standard.

Transporting oil by rail can never be 100 percent safe. By its nature, oil on the rails entails risk. But if rail oil traffic is to be as safe as possible, anything that compromises that goal is unacceptable. North Dakota’s standard must be written with that in mind.

Bakken Crude, Crude By Rail, Derailment, Emergency Readiness & Response, Explosion, Federal Regulation (U.S.), Oil stabilization, State regulation, Volatility

National Public Radio: Fiery Oil-Train Derailments Prompt Calls For Less Flammable Oil

Repost from National Public Radio
[Editor: An excellent overview of efforts to regulate the volatility of Bakken Crude.  Audio appears first below, followed by text version.  Significant quote: “Energy economist Philip Verleger, says the resistance is about money. ‘The industry never wants to take steps which increase the cost of production, even if it’s in the best interests of everybody,’ he says. Verleger says the opposition to proposed safety rules is short-sighted, and that the industry could actually hurt itself if there’s another serious incident. ‘I think the movement of crude oil by rail is one accident away from being terminated,’ Verleger says.”  – RS]

Fiery Oil-Train Derailments Prompt Calls For Less Flammable Oil

by Emily Guerin,

A fireball goes up at the site of an oil train derailment in Casselton, N.D., in this Dec. 30 photo. The fiery crash left an ominous cloud over the town and led some residents to evacuate.
A fireball goes up at the site of an oil train derailment in Casselton, N.D., in this Dec. 30 photo. The fiery crash left an ominous cloud over the town and led some residents to evacuate. Bruce Crummy/AP

Once a day, a train carrying crude oil from North Dakota’s Bakken oil fields rumbles through Bismarck, N.D., just a stone’s throw from a downtown park.

The Bakken fields produce more than 1 million barrels of oil a day, making the state the nation’s second-largest oil producer after Texas. But a dearth of pipelines means that most of that oil leaves the state by train — trains that run next to homes and through downtowns.

After several fiery accidents, oil companies are under pressure to make their oil less explosive before loading it onto rail cars. But oil companies say rules requiring those modifications will create more problems than they solve.

The trains passing through Bismarck worry Lynn Wolff, an activist with the environmental group Dakota Resource Council. “Last December we got the wake-up call,” he says. “That was the explosion and derailment of an oil train in Casselton, N.D.”

Wolff is referring to a crash in farmland just outside the small town of Casselton. No one was hurt, but the crash could have been deadly had it happened in town.

This summer, Bismarck officials ran through a simulated oil train derailment, with responders operating on the assumption that some of the town’s buildings would be devastated or destroyed, says Gary Stockert, Bismarck’s emergency manager. “We exercised with the assumption that we had over 60 or 70 casualties.”

Around the country, other cities and towns with oil train traffic are preparing for similar disasters.

In neighboring Minnesota, Gov. Mark Dayton “is concerned primarily about the safety of people along oil train routes, and in particular about the fact that this is a very volatile oil,” says Dave Christianson, an official with the Minnesota Department of Transportation.

Dayton has joined activists in asking North Dakota to force oil companies to “stabilize” the oil — to make it less explosive by separating out the flammable liquids.

Last month, North Dakota Gov. Jack Dalrymple convened a public hearing on the idea. Keith Lilie, an operations and maintenance manager for Statoil, which has a big presence in the Bakken, testified in front of a room full of oilmen in suits and cowboy boots who came to the hearing from places like Oklahoma City and Houston.

Lilie said he opposes having to build expensive tanks to heat the oil and separate out flammable liquids, like butane.

“Statoil believes the current conditioning of crude oil is sufficient for safely transporting Bakken crude oil by truck, rail and pipeline,” he said.

Eric Bayes, general manager of Oasis Petroleum’s operations in the Bakken, also testified. He asked what companies are supposed to do with those explosive liquids once they’re separated from the oil.

The stabilization process, he says, would “create another product stream you have no infrastructure in place for.”

But energy economist Philip Verleger, says the resistance is about money. “The industry never wants to take steps which increase the cost of production, even if it’s in the best interests of everybody,” he says.

Verleger says the opposition to proposed safety rules is short-sighted, and that the industry could actually hurt itself if there’s another serious incident. “I think the movement of crude oil by rail is one accident away from being terminated,” Verleger says.

Activist Lynn Wolff supports new rules that would make the oil less explosive, and says such regulation would protect people beyond North Dakota. “These bomb trains have been in Virginia and Alabama and blown up there as well,” he says.

Federal officials in Washington are also considering ways to make oil trains safer, such as strengthening tank cars.

As for making the oil leaving the Bakken less flammable, officials in North Dakota say they’ll make a decision by the end of the year.

This story was reported with Inside Energy, a public media collaboration focusing on America’s energy issues.

Crude By Rail, Oil Industry, Oil stabilization, State regulation, Volatility

North Dakota oil reps say Bakken does not need more regulation

Repost from AP in The San Francisco Chronicle
[Editor: To paraphrase, ‘Bakken is no more volatile, we are already conditioning it, it would cost too much.’  …well, what did we expect them to say?  – RS]

Oil reps say ND has proper rail shipment rules

By James MacPherson, Associated Press, September 23, 2014
FILE - In this June 5, 2012 file photo provided by Rangeland Energy, LLC, a train leaves the company's crude oil loading terminal near Epping, ND. Oil industry representatives told North Dakota regulators Tuesday, Sept. 23, 2014, that the state has proper regulations in place to treat Bakken crude for shipment by rail. North Dakota's Industrial Commission is considering new rules that would remove extra hydrocarbons from Bakken crude, a process some say might make the oil more safe for rail transport. Bakken crude has been linked to fiery oil train crashes like one outside Casselton, N.D., last December that left an ominous cloud over the town and led some residents to evacuate. Photo: Courtesy Of Rangeland Energy, LLC, AP / Rangeland Energy, LLC
In this June 5, 2012 file photo provided by Rangeland Energy, LLC, a train leaves the company’s crude oil loading terminal near Epping, ND. Oil industry representatives told North Dakota regulators Tuesday, Sept. 23, 2014, that the state has proper regulations in place to treat Bakken crude for shipment by rail. North Dakota’s Industrial Commission is considering new rules that would remove extra hydrocarbons from Bakken crude, a process some say might make the oil more safe for rail transport. Bakken crude has been linked to fiery oil train crashes like one outside Casselton, N.D., last December that left an ominous cloud over the town and led some residents to evacuate. | Photo: Courtesy Of Rangeland Energy, LLC, AP

BISMARCK, N.D. (AP) — Oil producers in North Dakota are objecting to any new state regulations that would require them to reduce the volatility of crude before it’s loaded onto rail cars.

North Dakota’s Industrial Commission is considering new rules that would require companies to remove certain liquids and gasses from crude oil train shipments, a process some say would make such transport safer. But oil industry officials told the commission Tuesday that the state already has proper regulations in place.

“To date, no evidence has been presented to suggest that measureable safety improvements would result from processes beyond current oil conditioning,” Hess Corp. spokesman Brent Lohnes said.

Oil trains in the U.S. and Canada were involved in at least 10 major accidents during the last 18 months, including an explosion in Lac-Megantic, Quebec, that killed 47. Other trains carrying Bakken crude have since derailed and caught fire in Alabama, Virginia, North Dakota.

But Kari Cutting, vice president of the North Dakota Petroleum Council, said nine of the incidents involved derailments and one was due to a leaky valve.

“The material contained in these railcars was not the cause,” Cutting said.

A federal report released earlier this year by the Pipeline and Hazardous Materials Administration says oil from North Dakota’s prolific Bakken formation may be more flammable than other crudes. But a report funded by the North Dakota Petroleum Council says Bakken oil is no more dangerous to transport by rail than other crudes and fuels.

Oil from North Dakota began being shipped by trains in 2008 when the state reached capacity for pipeline shipments. The state is now the nation’s No. 2 oil producer, behind Texas.

Cutting, whose group represents more than 500 companies working in North Dakota’s oil patch, said the each of the more than 11,000 oil wells in the state already has equipment in place to stabilize or condition the oil before shipment.

“Requiring stabilization beyond current conditioning practices would be a costly, redundant process that would not yield any additional safety benefits,” she said.

Industry officials also pointed out that stripping liquids and gases from Bakken crude would result in even-more volatile products that would still have to be shipped by rail.

Outside the Bismarck building where the commission was meeting, members of an environmental-minded landowner group hoisted a large banner that read, “Stop Bomb Trains, Stabilize Bakken Crude.”

Theodora Bird Bear of Mandaree, a spokeswoman for the Dakota Resource Council, told reporters that oil companies are cutting corners to boost their bottoms lines.

“When they talk about saving money, what they are really talking about is reducing public safety,” Bird Bear said.

Members of the group said the issue of safer Bakken oil goes well beyond North Dakota’s border.

“No one in this country feels safe around these rail lines,” Scott Skokos said.

Minnesota Gov. Mark Dayton on Tuesday sent a letter to Gov. Jack Dalrymple, asking for additional safety measures for oil trains leaving North Dakota.

Alison Ritter, a spokeswoman for the regulatory panel, said a decision on whether to change state rules could come within 90 days.

Bakken Crude, DOT-111, Federal Regulation (U.S.), Oil Industry, Oil stabilization

North Dakota perspective on Bakken: ‘Getting it right’

From The Bismarck Tribune, Bakken Breakout
[An interesting analysis of the future of Bakken crude extraction from the perspective of an apparent oil industry advocate.  They’re listening!  – RS]

Getting it right

By Brian Kroshus, Publisher, September 17, 2014

Domestic oil production levels in the United States continue to rise – largely the result of the boom in shale oil drilling across the country. Notable plays like the Bakken shale in North Dakota and Permian and Eagle Ford shale in Texas, have been leading the way with more promising formations in different geographies, targeted for exploration and drilling in the years ahead.

Plays like the Bakken, Permian and Eagle Ford were actually in decline until only recently, having peaked decades ago when conventional, vertical wells were the only economically viable means of extracting crude. Now, those same plays are part of a drilling renaissance in key parts of the country. Geologists have known for years that more oil was present, trapped in source stone within the formations, but developing technology to profitably extract shale oil hasn’t come easy.

Today, oil production in the United States is surging thanks to advances in horizontal drilling and hydraulic fracturing techniques. Drillers are not only better understanding the geology of shale formations, but technology necessary to economically drill and produce oil. Increasingly, they’re becoming more efficient. Still, only a small percentage resource is making its way to the surface presently. Undoubtedly, more will continue to be learned in the years ahead, ultimately leading to higher extraction percentage and proven reserves.

From an energy independence standpoint, the outlook for the United States is certainly promising. In October 2013, for the first time in nearly two decades, the United States produced more oil than it imported. Predictably, while there are those including the current administration attempting to take partial credit, rising output has been the result of drilling on state and private lands. On federal lands, production has actually declined during Pres. Barack Obama’s time in office according to the American Petroleum Institute.

Despite declines on federal ground, experts still predict that the United States could be fully energy independent by the end of this decade. According the EIA, U.S. oil production will rise to 11.6 million barrels per day in 2020, from 9.2 million in 2012, overtaking Saudi Arabia and Russia and becoming the world’s largest oil producer. Over the same period, Saudi Arabia production levels are expected to decline from 11.7 million barrels to 10.6 million. Russia will also product less oil, falling from 10.7 million to 10.4 million barrels per day.

With a shale revolution and energy renaissance underway in the United States, there’s reason to be optimistic. Achieving energy independence appears to be within our grasp. Still, despite the prospect of becoming an energy independent nation, potential roadblocks loom.

In May, at the 2014 Williston Basin Petroleum Conference, Harold Hamm, CEO of Continental Resources told convention attendees that “we can’t have any more issues.” He also said “It has to be done in an absolute, safe manner. It’s going to take all of us.” He was referring to recent problems related to Bakken crude including pipeline ruptures and the fiery train derailment near Casselton, North Dakota this past December.

There’s a lot at stake. Companies like Continental Resources and others, are expected to invest billions in the years ahead to fully develop plays like the Bakken. Drillers are keenly aware that it’s their game to lose. Hamm stressed, “If we have anything, they’re going to shut us down. So many people want to stop fossil fuel use and production.”

Despite the positive macroeconomic effects rising domestic oil production and decreased imports have on the U.S. economy, job creation and economic growth alone won’t guarantee that shale oil production will continue, unless it is deemed safe and not a threat to public safety during transportation of Bakken crude in particular.

Volatility levels of Bakken crude and implication on public safety, continues to be heavily debated. The Lac-Megantic, Quebec, rail tragedy, where 47 people lost their lives when a runaway train carrying tanker cars filled with Bakken formation crude, derailed and exploded in the heart of town has been at the center of that debate. The explosions were so intense, that approximately one-half of the downtown area was destroyed.

Understandably, safely transporting Bakken crude by rail throughout North America, knowing freight rail routes frequently pass through residential areas on their way to final destinations, is a top industry priority. Much of the focus has been and remains on the DOT-111 tank car. On July 23 the U.S. Department of Transportation announced comprehensive proposed rulemaking for the safe transportation of crude oil and flammable materials, with Bakken crude being mentioned – in the form of a Notice of Proposed Rulemaking (NPRM) and a companion Advanced Notice of Proposed Rulemaking (ANPRM).

The NPRM language includes “enhanced tank car standards, a classification and testing program for mined gases and liquids and new operational requirements for high-hazard flammable trains that includes braking controls and speed restrictions.” Within two years, it proposes to “phase out of the older DOT-111 tank cars for the shipment of flammable liquids including Bakken crude oil, unless the tank cars are retrofitted to comply with new tank car design standards.” It also seeks “Better classification and characterization of mined gases and liquids.”

The North Dakota Public Service Commission has set a special hearing for September 23rd, as a part of the discussion on the volatility of Bakken crude and potential oil conditioning requirements necessary to safely transport oil from the Williston Basin. Reducing the light hydrocarbons present in Bakken crude would not only provide greater safety, but the standardization of Bakken crude into a class of oil much like West Texas Intermediate, possibly creating premium pricing opportunities.

NDPSC involvement and recommendations in addition to oil conditioning include heightened rail inspection efforts at the state level in addition to the Federal Pipeline and Hazardous Materials Administration, and emergency response training. Working closely with federal officials and a heightened inspection process, will require additional resources moving forward.

Expanding pipeline capacity and reducing reliance on rail to transport Bakken crude will continue to be a growing need, playing a role in addressing public safety concerns. The North Dakota pipeline authority anticipates two new pipelines coming online before the end of 2016, with capacity for 545,000 barrels a day. Another third proposed pipeline, capable of handling an additional 200,000 barrels, could potentially be in operation by late 2016 or early 2017.

With daily production expected to reach 1.5 million barrels in 2017, and 1.7 million barrels in early 2020, diversifying how Bakken crude is moved to market will be necessary not only from a public safety standpoint, but in order to address logistically challenges that continue to surface as production levels increase.

Extracting domestic oil and gas, moving it to market and properly disposing of or using byproducts created during the production process in a safe and efficient manner will be necessary in order for plays like the Bakken to be fully capitalized on. Those opposed to fossil fuel production will continue to watch and patiently wait for any opportunity to pressure elected officials and sway public opinion.

Ensuring both public and environmental safety to ensure the future of domestic oil production – will require a cooperative effort on the part of both industry and the state. As Harold Hamm alludes to, it truly is industries game to lose.