Gas vapor eyed as factor in West Virginia oil train fireball
By Patrick Rucker, Thu Feb 19, 2015 3:26pm EST
WASHINGTON (Reuters) – Federal investigators will examine whether pressurized gas played a role in the massive blast that followed the derailment of a train carrying crude oil through West Virginia this week, the U.S. Transportation Department said on Thursday.
Questioning the possible role of gas vapors in the West Virginia fire broadens the debate over how to ensure public safety at a time when drastically larger volumes of crude oil are being shipped by rail and roll through cities and towns.
At least two dozen oil tankers jumped a CSX Corp track about 30 miles south of the state capital, Charleston, on Monday, touching off a fireball that sent flames hundreds of feet into the sky.
The U.S. Transportation Department said it has an investigator at the site to take samples of crude once the wreckage stops burning.
“We will measure vapor pressure in the tank cars that derailed in West Virginia,” said department spokeswoman Suzanne Emmerling.
Some experts say the nature of the explosion, which saw a dense cloud of smoke and flame soaring upwards, could be explained by the presence of highly pressurized gas trapped in crude oil moving in the rail cars.
“Vapor pressure could be a factor,” said Andre Lemieux of the Canadian Crude Quality Technical Association, a trade group which is helping the Canadian government adopt crude oil quality tests.
The American Petroleum Institute, the leading voice for the oil industry, declined to comment on whether high vapor pressure might have played a role in West Virginia.
“What we need to do now is allow the accident investigators to do their jobs,” said Brian Straessle, a spokesman for the trade group.
In the past twelve months, API and the North Dakota Petroleum Council have argued that the dangers of vapor pressure are exaggerated, citing self-funded studies that indicate vapor pressure readings are safe.
The Transportation Department did not call for regulations governing the presence of gas vapors in a national oil train safety plan it drafted last summer and is now with the White House for review.
That plan would have oil trains fitted with advanced braking systems to prevent pileups and tougher shells akin to those carrying volatile propane gas on the tracks.
The question of whether gas vapors make oil shipments more prone to detonate has been kept on the margins of the U.S. debate over transporting oil by rail.
The oil train sector has thrived in recent years, pushed by a crude oil renaissance in North Dakota’s Bakken region.
(Reporting By Patrick Rucker; Ernest Scheyder contributed from Williston, North Dakota; editing by Andrew Hay)
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.
Producers in North Dakota’s Bakken oil fields have been told to make crude is safer before being shipped by rail
By Chris Sorensen, December 10, 2014
After years of insisting oil sucked from North Dakota’s Bakken shale wasn’t inherently dangerous, producers have been ordered to purge the light, sweet crude of highly flammable substances before loading it on railcars and shipping it through towns and cities across the continent.
State regulators said this week that the region’s crude will first need to be treated, using heat or pressure, to remove more volatile liquids and gases. The idea, according to North Dakota’s Mineral Resources Director Lynn Helms, wasn’t to render the oil incapable of being ignited, but merely more stable in preparation for transport.
It’s the latest regulatory response to a frightening series of fiery train crashes that stretches back to the summer of 2013. That’s when a runaway train laden with Bakken crude jumped the tracks in Lac-Mégantic, Que., and killed 47 people in a giant fireball. In the accident’s immediate aftermath, many experts struggled to understand how a train full of crude oil could ignite so quickly and violently. It had never happened before.
Subsequent studies have shown that Bakken crude, squeezed from shale rock under high pressure through a process known as hydraulic fracturing, or “fracking,” can indeed have a high gas content and vapour pressure, as well as lower flash and boiling points. However, there remains disagreement about whether the levels are unusual for oil extracted from shale, and whether the classifications for shipping it should be changed.
Still, with more than one million barrels of oil being moved by rail from the region each day, regulators have decided to err on the side of caution and implement additional safety measures. For producers, that means buying new equipment that can boil off propane, butane and other volatile natural gases. Under the new rules, the Bakken crude will not be allowed to have a vapour pressure greater than 13.7 lb. per square inch, about the same as for standard automobile gasoline. Regulators estimate that about 80 per cent of Bakken oil already meets these requirements.
The industry isn’t pleased. It continues to argue that Bakken oil is no more dangerous than other forms of light, sweet crude, and is, therefore, being unfairly singled out. It has also warned that removing volatile liquids and gasses from Bakken crude would result in the creation of a highly concentrated, highly volatile product that would still have to be shipped by rail—not to mention additional greenhouse-gas emissions. It goes without saying that meeting the new rules will also cost producers money—at a time when oil prices are falling.
In the meantime, regulators on both sides of the border are taking steps to boost rail safety by focusing on lower speed limits, new brake requirements and plans to phase out older, puncture-prone oil tank cars. Earlier this year, Transport Minister Lisa Raitt said Canada would be “leading the continent” on the phase-out of older DOT-111 tank cars, which have been linked to fiery crashes going back 25 years. There are about 65,000 of the cars in service in North America, about a third of which can be found in Canada.
Repost from The Star Tribune, Minneapolis/St. Paul MN [Editor: Author Lisa Westberg Peters writes with a personal style that is engaging and informative: “I’ve seen Bakken crude oil as it comes out of the ground. It was surprising in several ways: It was almost green, quite fluid and downright fizzy with natural gases. It’s the high gas content that makes Bakken shale oil so explosive.” – RS]
New Bakken volatility standards are pointless
Lisa Westberg Peters, December 15, 2014
The explosion risk still exists, which emboldens pipeline supporters — but why must our choices be so dismal?
A large swath of Lac-Mégantic, Quebec, was destroyed and 47 people were killed in July 2013 when a train carrying Bakken crude oil derailed, sparking several explosions and forcing the evacuation of up to 1,000 people. Photo: Paul Chiasson • The Canadian Press/AP
I’ve seen Bakken crude oil as it comes out of the ground. It was surprising in several ways: It was almost green, quite fluid and downright fizzy with natural gases. It’s the high gas content that makes Bakken shale oil so explosive.
When the state of North Dakota established new limits on vapor pressure last week for the oil shipped out of the state, my first reaction was relief. Flammable liquids with lower vapor pressures are less volatile. We’ve seen several explosive rail accidents in recent years involving Bakken oil; an oil train derailment last year in the small Quebec town of Lac-Mégantic killed 47 people and flattened its downtown. I was pleased that regulators were addressing this problem.
But when I took a closer look at the numbers, I felt more dismay than relief. Even if oil producers exceed the regulators’ demands — and regulators say they often do — Bakken crude will still be explosive.
The appropriate comparison seems to be gasoline.
Lynn Helms, head of the North Dakota Department of Mineral Resources, said the new vapor pressure standard of 13.7 pounds per square inch (psi) would make Bakken crude no more volatile than the gasoline we put in our cars every day.
In March, an investigation by the Transportation Safety Board of Canada concluded that the Bakken oil in rail cars at Lac-Mégantic was “as volatile as gasoline,” but the vapor pressure was measured at 9 to around 9.5 psi. In other words, the Bakken crude that exploded in Lac-Mégantic was less volatile than what North Dakota regulators are demanding now, and it still exploded.
In a New York Times article last week [North Dakota Regulators Tell Producers to Filter Crude Oil of Flammable Liquids], Clifford Krauss reported: “Once the rules are in force early next year, transported North Dakota crude oil will have a similar volatility to that of automobile gasoline, which should decrease the risk and size of any fire that might occur once a rail car is punctured in an accident, according to state regulators.” His story never mentioned the findings of the Canadian government.
Why wasn’t this New York Times reporter more skeptical of the assurances of North Dakota oil regulators, especially after the recent New York Times revelations about the leniency of regulators toward the oil industry?
The new vapor pressure standard announced last week is pointless. We will still face danger from exploding oil trains.
This disturbing fact tends to encourage pipeline supporters. Pipelines are safer, they say. In the past, oil transported by pipelines has tended not to explode and kill people; instead it spills and contaminates streams, lakes and aquifers. If you value people’s lives over clean water supply, in the short term, pipelines seem better.
But why do we have to make such lousy choices to keep our domestic energy boom rolling — to keep workers working and our dream of energy independence alive? Let’s do everything we can to encourage the other domestic energy boom, the wind and solar boom, that has already begun and that survives today despite many obstacles, including national policies that still encourage fossil fuel, yesterday’s energy source. If we were to place a price on carbon tomorrow, we would not need as many pipelines and we would be able to reduce the number of oil trains passing through our neighborhoods.
Climate experts urge us to leave much of the world’s remaining fossil fuel, including Bakken crude, in the ground. If we do as they advise, we will disrupt job markets and be forced to rethink the way we do almost everything. Why should we voluntarily face such disruption? One very good reason: We already face the prospect of pervasive disruption posed by a changing climate. It’s far preferable to take well-designed and systematic measures to control disruption than let disruption control us.
Lisa Westberg Peters is the author of “Fractured Land: The Price of Inheriting Oil” (Minnesota Historical Society Press, 2014). She lives in Minneapolis with her family.
After years of insisting oil sucked from North Dakota’s Bakken shale wasn’t inherently dangerous, producers have been ordered to purge the light, sweet crude of highly flammable substances before loading it on railcars and shipping it through towns and cities across the continent.
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