Bakken Crude by Rail Under Attack

Crude by Rail
Crude by Rail

On Tuesday, the Swinomish Indian Tribal Community filed a lawsuit in federal court against BNSF Railway to restrict the movement of crude oil by rail through their reservation. They are seeking a permanent injunction that requires the company to live up to a 1991 agreement to limit the number of trains on its land to two per day.

The Tribal Community is located in Washington State, but the train tracks that run across its land bring crude from the Bakken region of North Dakota. Many believe that this oil is more dangerous.

Related: Is Bakken Oil More Flammable?

Experiences across the country have now shown us all the dangers of Bakken Crude,” Swinomish Indian Tribal Community Chairman Brian Cladoosby said in a statement. “It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith,” he said.

Recent reports have crude by rail transport up 1700% over the last five years and accidents at a near-tenfold rise since 2008. With oil production currently at all time highs many fear that the number of accidents will increase and add to recent incidents:

  • 3/8/15:Train carrying crude oil derails in northern Ontario more
  • 3//7/15 Train carrying crude oil derails in Canada more
  • 3/6/15: Oil train carrying Bakken crude explodes in Illinois more
  • 2/14/15 Train carrying crude oil derails in Canada more
  • 2/17/15: WV derailment carries Bakken crude in more

Related: Bakken Oil Safety

photo: © Kolyvanov | The Railway Tanks Photo

Mineral Owners Sue Over Bakken Flaring

Bakken Natural Gas Flaring
Bakken Natural Gas Flaring

North Dakota mineral owners have started filing class action lawsuits (10 to date) against oil and gas companies that are flaring gas produced from their property.

Roughly 30% or 300 mmcfd of the natural gas produced in North Dakota is flared.

Mineral owners, and the lawyers working for them, hope to force operators to pay them based on the market value of the flared gas. Even though I consider many estimates for losses high because they assume Henry Hub or a similar benchmark natural gas price, there are millions in lost royalties each month.

No matter how you look at it, operators will be more highly scrutinized and might have a bigger financial incentive to decrease flaring. This could be the straw that forces operators to build necessary infrastructure that will minimize flaring. Now that most acreage is held by production in the region, operators can be more deliberate in their development drilling.

One result might be that operators allocate resources in central locations that have access to necessary infrastructure.

The companies named in the suits include:

  • Continental Resources
  • ConocoPhillips
  • Crescent Point Energy
  • ExxonMobil (XTO Energy)
  • HRC Operating
  • Marathon Oil
  • Samson Resources
  • SM Energy
  • Statoil
  • WPX Energy

The industry will be forced to address this issue in the courts, but watch for operators to accelerate plans to reduce flaring on all fronts. Coincidentally, the ND Petroleum Council announced a new task force dedicated to flaring the day before the law suits became public.