Safety questions, Are standards for conditioning Bakken crude oil for transport adequate?

Fiery explosions from North Dakota’s Bakken oil in recent weeks are raising questions about the safety of the light, sweet crude, even with new oil conditioning standards to take effect April 1, at the same time that a major North American railroad is questioning whether it even wants to be in the crude transport business (see story below).

But North Dakota’s top industry regulator says the new standards are only one part of the solution to eliminate rail car explosions, so he’s urging the federal government to hurry with its new rail safety rules.

In December, the North Dakota Industrial Commission voted to require Bakken petroleum system wells to use equipment that will separate the gas and liquid hydrocarbons and condition the oil to a vapor pressure of no more than 13.7 pounds per square inch.

The order’s effective date was delayed in order to allow producers time to install equipment or consider alternative methods. North Dakota Department of Mineral Resources Director Lynn Helms told Petroleum News Bakken he hoped the U.S. Department of Transportation would release its rules around that time as well since the rules include requiring a critical piece of equipment ― a pressure relief valve to allow explosive gases to escape when vapor pressure reaches 75 psi.

“This combination of conditioned crude oil and then a relief valve that’s designed around that will prevent the enormous fire balls,” Helms said. “If trains derail, some cars will be torn open and some will catch on fire but we will not have the massive explosions because the crude oil has a higher boiling point … and relief valves let pressure off in a controlled way instead of the tank tearing open and shooting Bakken oil into the air.”

North Dakota’s 13.7 psi limit is based on the national standard of 14.7. Helms said the NDIC order took into account that sampling and measuring equipment carries about a 1 psi margin of error. In December, he said that while only about half of operators were meeting the conditioning standard, 80 percent of the Bakken well sites already had the equipment necessary and could easily begin to comply.

Political leaders and activist groups are demanding regulators issue stronger safety rules, often calling for stabilization of the oil instead of conditioning. Stabilization is a more rigorous process and removes more of the dissolved explosive gases from the Bakken crude, but it would require additional infrastructure that North Dakota does not have, and critics say the state is hesitant to add more costs to the industry. “It isn’t money,” Helms insists. “We truly believe that we can produce stable crude oil by conditioning it at the well sites and that’s the most logical way to do it because the infrastructure is there to collect that propane and butane and take it some place to be processed.”

NDIC’s rules do allow for stabilization as an alternative to oil conditioning and Helms said DMR field inspectors are checking to see if any operators are planning to take that route.

Petroleum News Bakken reported March 8 that New York’s senior Sen. Charles Schumer told the DOT and Department of Energy to develop regulations to require oil stabilization prior to shipment. Schumer said the oil conditioning standards developed by NDIC were “not enough.”

Phil Steck, a New York state assemblyman who serves a district near a heavy oil train traffic corridor also insists the problem is the product, not the trains. He sent a letter to DOT in February asking for stabilization towers to remove the explosive gases.

Numerous activist groups are also petitioning for greater regulation to ensure safety. The Dakota Resource Council testified at North Dakota’s oil conditioning hearing in September that stabilizing the oil is much safer, and following a West Virginia derailment in February, the group issued a statement that said, “Responsibility for this explosion is squarely at the feet of North Dakota officials from Gov. Jack Dalrymple on down for their inept handling of regulating oil extraction in North Dakota.”

“It’s not possible to change the characteristics of the oil enough that it will not boil in one of those incidences. It’s not possible to make it nonflammable and it’s not possible to take away all the things in the crude oil that boil when one of those tank cars sits in a fire,” Helms said. “If we did that, the oil would have no value; it would be road tar.”

NDIC used the national standard of 14.7 psi as a starting point since it was based on the best science at the time. Tests performed on the oil from the train that derailed in the West Virginia measured 13.9 psi, below the national standard and just above North Dakota’s standard that goes into effect on April 1. In that crash, the cars caught fire, damaging a home and forcing hundreds of families to evacuate after losing drinking water and electricity. The fatal train derailment in Lac-Megantic, Quebec, in 2013 involved crude with vapor pressures less than 10 psi. That accident’s fires and explosions killed 47 people. But Helms said the test results in the Quebec incident shouldn’t enter the equation since Canada’s own transportation safety board reported that the samples were controversial and not accurate. “They themselves said this is not a number you want to hang your hat on,” Helms said.

A study by the DOE is under way with collaboration from the University of North Dakota’s Energy and Environmental Research Center to determine whether the 14.7 psi national standard needs to be changed. Helms said if that number changes, so will North Dakota’s. But Helms said current testing doesn’t indicate that changing the psi dramatically would affect the outcome at a derailment.

“We need the rail cars with the relief valves. We really, really need them,” Helms said. “It’s the equivalent of a third of a gas plant. That relief valve could flow a third as much as the (Oneok) Garden Creek gas plant (in McKenzie County). That should be enough to keep those tanks from exploding.”

Public concern with crude by rail continued to grow when 21 of 103 tanker cars loaded with Bakken crude jumped the tracks in western Illinois on March 5 and a resulting fire spread to five rail cars (see story, page 1). While DOT is expected to issue new regulations for safer tank cars, the tank cars involved in the West Virginia and Illinois derailments were the relatively modern, sturdier CPC-1232 (Casualty Prevention Circular) tank cars designed to reduce the chances of rupturing during derailments. Voluntary safety practices from DOT and the American Association of Railroads have reduced train speeds, but that doesn’t appear to have been a factor in the West Virginia derailment, according to Sarah Feinberg, the acting head of the Federal Railroad Administration. Feinberg said her agency is seeking the best solution to rail safety.

“It’s not just coming up with a better tank car for transporting this product, but we’re also looking at how the train is operated,” she said. “One of the most important things we can look at is braking systems to make sure that they are stopping and the cars are not piling up on each other.”

Rail operators have balked at the idea of individual tank car brakes due to cost. But every rule regarding rail safety adopted to date by the federal government has imposed requirements on railroad operators and not on the energy industry.

“The type of product the train is transporting is also important,” Feinberg said. “The reality is that we know this product is volatile and explosive.”

Feinberg has supported policy to require the oil industry to strip out more gases from crude before shipping, but such measures are not included in the proposed federal rules. On Feb. 5, DOT finished drafting final rules and sent them to the White House budget office for review, which is expected to be complete within 120 days. Industry groups such as the American Petroleum Institute and the North Dakota Petroleum Council have insisted Bakken crude does not present a greater risk than other crude oils.

Explosions haven’t been limited to the rail lines. On March 7, three oil tanks at a well location exploded near Killdeer, North Dakota, and a massive fire broke out after an explosion at an oil and gas waste disposal site north of Alexander. No one was injured and all the incidents are still under investigation. The Alexander fire was so massive that firefighters could not approach it and simply had to watch the fire burn itself out. “We’re scratching our heads at Killdeer,” Helms said. “The well was shut-in ― idle ― while they hydraulically fractured an offset well, so there shouldn’t have been anything going on there to cause an explosion. There’s a lot of investigation to do to figure out why there would be an explosion at a facility that was not producing, not active.”

Approved Oil Conditioning Order #25417
https://www.dmr.nd.gov/oilgas/Approved-or25417.pdf

IN THE MATTER OF A HEARING CALLED ON
A MOTION OF THE COMMISSION TO
CONSIDER AMENDING THE BAKKEN,
BAKKEN/THREE FORKS, THREE FORKS,
AND/OR SANISH POOL FIELD RULES TO
ESTABLISH OIL CONDITIONING STANDARDS
AND/OR IMPOSE SUCH PROVISIONS AS
DEEMED APPROPRIATE TO IMPROVE THE
TRANSPORTATION SAFETY AND
MARKETABILITY OF CRUDE OIL.

IT IS THEREFORE ORDERED:

(1) No well shall be hereafter produced in a Bakken, Bakken/Three Forks, Three Forks, and/or Sanish Pool (the Bakken Petroleum System), except in conformity with the regulations below without special order of the Commission after due notice and hearing.

(2) All wells completed in the Bakken Petroleum System must be produced through equipment utilizing the following conditioning standards to improve the marketability and safe transportation of the crude oil:

(a) A gas-liquid separator and/or emulsion heater-treater of ample capacity and in good working order that effectively separates the production into gaseous and liquid hydrocarbons, must be operated within manufacturer’s recommended operating limits;

(b) Production facilities utilizing a gas-liquid separator and/or an emulsion heater-treater operating at a pressure of no more than 50 psi on the final stage of separation prior to the crude oil storage tanks must heat the produced fluids to a temperature of no less than 110 degrees Fahrenheit. Such temperature may be applied in the emulsion heater-treater or prior to the fluids entering the separator if no emulsion heater-treater is utilized; or

(c) Production facilities utilizing a gas-liquid separator and/or an emulsion heater-treater operating at a pressure greater than 50 psi on the final stage of separation prior to the vapor recovery system or crude oil storage tanks must heat the produced fluids to a temperature of no less than 110 degrees Fahrenheit and shall also be required to install a vapor recovery system on or immediately upstream of the crude oil storage tanks; or

(d) Production facilities utilizing gas-liquid separator(s) and/or emulsion heater-treater(s) operating at pressures and temperatures other than those provided in (b) or (c) above shall be allowed only upon the operator demonstrating that the operating pressures and temperatures of the separator(s) and/or emulsion heater-treater(s) are producing crude oil with a Vapor Pressure of Crude Oil (VPCRx) no greater than 13.7 psi or 1 psi less than the vapor pressure of stabilized crude oil as defined in the latest version of ANSI/API RP3000 whichever is lower. Such test must be performed by a person sufficiently trained to perform the test. All VPCRx tests shall be performed in accordance with the latest version of ASTM D6377 and shall be conducted quarterly. Samples for testing must be collected in accordance with ASTM D3700 or ASTM D5842 at the point of custody transfer. A Sundry Notice (Form 4) shall be submitted to the Director within 15 days of the test date which includes a screen shot and/or printout of the VPCRx test conducted and details the operating capacities, pressures, and temperatures of all well site conditioning equipment at the time ofthe test; or

(e) Production facilities utilizing an alternative oil conditioning method other than a gas-liquid separator(s) and/or an emulsion heater-treater(s) will only be approved by the Commission after due notice and hearing, and must:

(a) be capable of delivering crude oil with a VPCRx no greater than 13.7 psi at custody transfer; or

(b) provide safe transportation of marketable crude oil to a crude oil conditioning or stabilization plant.

(f) Commission personnel will periodically inspect production facilities and records to confirm operator compliance with the standards and requirements contained herein. Noncompliance could result in the Commission issuing civil and criminal penalties pursuant to North Dakota Century Code § 38-08-16.

(3) The following practices are hereby prohibited:

(a) Blending crude oil produced from the Bakken Petroleum System with liquids recovered from gas pipelines prior to custody transfer; and

(b) Blending crude oil produced from the Bakken Petroleum System with natural gas liquids (i.e. condensate, pentanes, butanes, or propane) prior to custody transfer.