Hess, Marathon, and Whiting Face Fines for Bakken Oil Classifications

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Hess, Marthon Oil, and Whiting Petroleum all face potential fines from the Pipeline and Hazardous Materials Safety Administration (PHMSA). The fines are being pursued as a result of PHMSA's investigation into the transportation of Bakken oil.

Oil taken from cargo tanks en route to rail facilities in the region was not properly classified. PHMSA took 18 samples from cargo tanks, storage tanks, and pipelines. In all, 11 of the 18 samples were not classified properly.

Hess faces fines of more than $50,000, Marathon Oil faces ~$30,000 in fines, and Whiting faces $12,000 in fines.

Also read:DOT's Arm Issues Bakken Sahle Oil Shipping Safety Alert

“Transportation has an important role to play in helping meet our country’s energy needs, thanks to the increased production of crude oil, but our top priority is ensuring that it is transported safely,” said Transportation Secretary Anthony Foxx. “The fines we are proposing today should send a message to everyone involved in the shipment of crude oil: You must test and classify this material properly if you want to use our transportation system to ship it.”

PHMSA requires the use of nine hazardous materials classifications. Proper classification ensures the material is handled properly and that emergency responders can accurately assess accidents.

As a result of the findings, PHMSA has expanded the scope of the testing to include testing for proper vapor pressure characterizations, corrosivity, hydrogen sulfide, and concentration of dissolved gases.

http://phmsa.dot.gov/

Is Bakken Oil More Flammable?

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Bakken oil is produced at a high quality that makes it easier to refine into commercial products and makes it easier to ignite.

There is nothing new about oil being flammable. The science has been the same for well....forever. At a point a few decades ago, light-sweet crude (WTI) was the dominate oil quality in the U.S.

Light oil production growth in the Bakken, Eagle Ford, and Permian isn't something the industry has never seen or handled, but it is an unforeseen boom bigger than anyone expected.

Now that trains are moving the oil on a larger scale, it's important the terminals and rail companies meet high standards to ensure safety.

The flash point or lowest possible temperature at which the oil can be ignited is lower for Bakken oil than it is for tar sands coming out of Canada. That fact led the DOT to issue a Bakken Shale Oil Shipping Safety Alert last week.

What's Important to Ensuring Safety in the Bakken?

In short, the answer is YES. Bakken crude is of high quality and more flammable than lower grade crude oil, but that's nothing new and shouldn't be a shock. Emphasis needs to be placed on classifying the crude correctly (which it hasn't been shown that there is a problem there) and making sure the railroads are as safe as possible.

Additional safety measures need to be taken when hydrogen-sulfide or other flammable gases are dissolved in the oil. The oil needs to be degasified before transportation.

The other thing we can do as voters - Make sure pipelines can be built where needed without undue obstacles. The track record speaks for itself - pipelines are the safest and most efficient way to move hydrocarbons.

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