Bakken Oil Safety

Bakken Oil Safety
Bakken Oil Safety

Two separate accidents across the Williston region on Saturday have added to the growing concern about Bakken oil safety and is fueling the intense debate about the way oil is produced, contained and transported in the United States.

In a new series of posts, we will examine this issue and try to separate the facts from the hype and the science from the scare tactics.

Related: Bakken Oil Transport Still Not Safe

Explosions Galore

An explosion erupted at 3:00am at an oil and gas waste disposal site north of Alexander, N.D. in McKenzie County. There were no injuries reported, but the massive fire spread to eight storage tanks and was so intense that emergency crews decided to let it burn itself out. The flames subsided by mid morning just as three oil tanks operated by Marathon went up in flames another 53 miles away, near the small town of Killdeer. These incidents were only a few weeks after eight tanks were destroyed in the same area as 1500 barrels of crude blazed across the street from an Enbridge facility.

Crude by Rail

A top concern when thinking about Bakken oil safety is the transport of crude by rail.

According to one report, “there were 117 crude-by-rail spills in the United States during 2013, a near-tenfold rise since 2008 (...) and there were more such spills in 2014 than in any year since the federal government began collecting data on spill incidents in 1975.

With oil production currently at all time highs, the amount of crude traveling the country will escalate and, many fear, so may the number of accidents.

Just in the last few weeks, there have been a number of news reports of these accidents:

  • 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

Next in the series: Is Bakken crude really more dangerous?

Rail Lines Face Bottlenecks in Bakken

Oil Rail Car Image
Oil Rail Car Image

At the Surface Transportation Board (STB) hearing this week in Fargo, ND, officials from the state and other upper Midwestern states urged U.S. regulators to put pressure on railroads to fix issues that are blocking grain shipments. The culprit some believe is the oil & gas industry - in August, approximately 60% of oil produced in North Dakota was transported out of the state by rail, and some argue the railroads are favoring oil companies over agriculture.

Bloomberg reported, as grain produced last year sits in storage, waiting for trains to carry it to market, the bottlenecks may get worse as an anticipated record grain harvest begins, officials warned.

John Hoeven, the Republican Senator from North Dakota, said at the hearing, “the bottom line is that we need greater rail capacity to meet the growing needs of North Dakota’s expanding economy and dynamic businesses and farms. To make that happen, railroads must commit to investing in more rail infrastructure, including more locomotives, more railcars and more crews.

In June, the board ordered the railroads to provide weekly updates on bottlenecks. Regulators can order railroads to prioritize certain shipments over others, although that power is rarely used, the Bloomberg article noted.

BNSF Railway, along with Canadian Pacific Railway Ltd., was directed by the STB to appear. Earlier in 2014, BNSF said it would hire 5,000 workers and add 500 locomotives to expand its network. The company said it’s spending $390-million on expansion and maintenance projects in North Dakota in 2014. Since 2009, traffic in and out of North Dakota has increased by 144% on BNSF.


Bakken Crude Pushed to West Coast Refining Markets

Bakken Crude Rail Costs
Bakken Crude Rail Costs

Bakken Crude could be pushed out of the Gulf Coast refining market as soon as this year or early next year. That prediction was revealed by Bentek Energy Sr. Analyst Erika Coombs at the annual Benposium Conference in early June of 2014.

Production growth in the Eagle Ford Shale and Permian Basin, and nearly completed pipeline and infrastructure projects for the Permian, will make Bakken crude transport to the Gulf Coast uncompetitive according to Coombs. As a result, oil production from the Bakken is expected to primarily target the West Coast refining markets in Washington and California. 

Although the destination for some Bakken crude volumes may be changing, how it will get there is not. Analysts at the conference said rail will remain the major source of transport for Bakken crude. Approximately 70% of Bakken crude arrives to market by rail.

Read more: Railroads Are Moving 70% of Bakken Oil Production

Currently, pipeline infrastructure in the Bakken is slim, but two new major oil pipelines have been proposed to serve the Williston, including the Double H Pipeline and the Sandpiper Pipeline. At the end of 2013, Enbridge Partners, the company that proposed the Sandpiper Pipeline, announced it reached an agreement with Marathon Petroleum to become an anchor shipper.

Read more: Enbridge's Sandpiper Pipeline Gains Anchor Shipper in Marathon Petroleum - Open Season

Highlights from Benposium 2014

  • Rail will remain the primary source of transportation in the Williston Basin
  • Bakken crude oil transport will shift from Gulf Coast refining market to West Coast
  • Bentek predicts the price of crude oil will dip to $82 by 2019
  • Bakken average drilling days down from 30 - 19 from 2011 - 13