ND Regulators Hold Hearing About Bakken Crude Treatment

Oil Rail Car Image

Executives at top oil and gas companies in the Bakken are fighting back against North Dakota regulators, opposing the treatment of Bakken crude before it shipped via rail, according to the Wall Street Journal (WSJ). On Tuesday, the North Dakota Industrial Commission (NDIC) heard testimony from oil executives, who claim Bakken oil is sufficiently treated at the well site. The paper first reported the NDIC would be holding hearings in August concerning further treatment of Bakken crude, which has been linked to several explosions, resulting from train derailments. Just under 70% of Bakken crude is transported out of North Dakota by rail to coastal refining markets and hubs like Cushing, OK.

Read more: NDIC Considers Bakken Crude Treatment

Critics believe Bakken crude is dangerous, and needs to undergo stabilization. In similar plays like the Eagle Ford Shale in South Texas, crude is routinely stabilized before transport. At the hearing, representatives from the Dakota Resource Council, a nonprofit environmental group, asked for a moratorium on drilling permits, according to the paper.

The most appropriate action is probably somewhere between a moratorium on drilling permits and letting industry write its own ticket. As a matter of public safety, a thorough analysis of this issue is not unwarranted, but extreme measures to completely halt new development should be met with total disregard.

An issue not often discussed surrounding this issue is pipelines. North Dakota is woefully behind on its pipeline infrastructure. There are bascially two reasons - economics and regulation. It's cheap to transport oil by rail, and pipelines are expensive to build. For the companies that build pipelines, it can sometimes be difficult to secure commitments, and furthermore, state and federal government regulations have made building pipelines more challenging.

Ultimately, the transport of Bakken crude needs to be viewed from a standpoint of both safety and economics. It seems like common sense, and it would be nice if both the oil companies and the regulatory bodies could get on the same page in this respect.

Read more at wsj.com

NDIC Considers Bakken Crude Treatment

Bakken Oilfield StorageTanks

The North Dakota Industrial Commission (NDIC) plans to hold a public hearing in the next few weeks to determine ways to reduce the volatility of Bakken crude before it is stored or transported.

The Wall Street Journal (WSJ) reported North Dakota officials are considering requiring oil & gas companies to treat Bakken crude before it is loaded onto trains. Stabilization, which is common in similar shale plays like the Ealge Ford Shale, is also being discussed among officials.

While some industry players argue Bakken crude shouldn't be subject to stabilization, a process by which the vapor pressure of crude oil is lowered, making it less volatile, they may not have a choice in the matter. According to the WSJ, the federal government has been weighing the idea of making stabilization a requirement.

Differing Opinions on Bakken Crude Volatility

In support of the argument for Bakken crude testing and possibly stabilization, the Pipeline and Hazardous Materials Safety Administration (PHMSA) released a report in July of this year saying crude oil from the Bakken region in North Dakota tends to be more volatile and flammable than other crude oils. During the same month, the Department of Transportation (DOT) also proposed phasing out older DOT-111 tank cars for the shipment of packing group I flammable liquids within two years.

Read more: DOT Seeks New Rail Car Design and Bakken Crude Testing

By contrast, in May of this year, The American Fuel & Petrochemical Manufacturers (AFPM), an industry trade association, released findings from a study that examined the characteristics of Bakken crude oil. In their report, the AFPM claims Bakken crude is within the safety standards for current rail car designs (DOT 111 tank cars), and is comparable to other light crudes.

Read more: AFPM Study Finds Bakken Crude Meets Current Safety Standards for Rail Car Design

Read more at wsj.com