‘Wild West’ Approach to Regulation in Bakken Shale Means Bomb Trains Continue to Roll

DeSmogBlog | October 7, 2014 | Post by Justin Mikulka

Prepare yourself for a rare moment of honesty from the oil industry.

It happened on Sept. 23 at a hearing of the North Dakota Industrial Commission during a discussion on ways to make Bakken crude oil less flammable for transportation.

The flammable characteristics of our product are actually a big piece of why this product is so valuable. That is why we can make these very valuable products like gasoline and jet fuel,” said Tony Lucero of oil producer Enerplus.

So, there you have it: making Bakken crude safer to transport by rail via oil stabilization, which removes flammable natural gas liquids such as butane, means making it less valuable to the refineries.

This profit motive is at least part of the reason why the American Petroleum Institute has made it clear it will not accept mandatory oil stabilization as part of the new oil-by-rail regulations.

Would the stabilization of Bakken crude reduce the relative refining value of the commodity …?” wrote Ronald Day in testimony submitted on behalf of Tesero.

The Wall Street Journal quoted an industry executive earlier this year saying that stabilizing the crude could cut potential revenue by “perhaps 2%.”

In that same article, Robert Hall, a National Transportation Safety Board director, said the decision on whether to stabilize is driven by commercial considerations.

Throughout the discussions about moving Bakken crude by rail that have occurred since an oil train explosion in Lac-Megantic, Que., killed 47 people, there is ample evidence showing both the oil and rail industries lobbying hard for profits over safety.

Lynn Helms is the director of the Department of Mineral Resources within the North Dakota Industrial Commission. He has the responsibility of leading the efforts to determine if the commission will issue new regulations requiring oil producers in the Bakken region to stabilize their oil prior to shipping it by rail.

When members of environmental group the North Dakota Resource Council recommended oil stabilization be required for the Bakken crude in their testimony at the hearing, Helms admitted he had no knowledge of the process.

Do you have a contact or any information with regards to the stabilization like in Texas? I’ve tried to find somebody at the Texas Railroad Commission and I can only find one rule on stabilization and that’s to get rid of H2S. So I’m just wondering if there is something I’m completely missing…somebody I can talk to?”

Well, yes, there is something Helm is “completely missing” — like the fact that in the Eagle Ford region of Texas, oil is routinely stabilized prior to being transported by pipeline. While federal regulations don’t require the oil to be stabilized prior to shipment via pipeline, the Wall Street Journal has reported that pipelines use oil stabilization voluntarily “for safety purposes.”

Myron Goforth, president of a stabilizer leasing company in Houston, explained this to Reuters, saying, “Pipeline specifications require certain pressure limits that pretty much force companies to strip out NGLs.” Rail companies have no such requirements.

Stabilization is a proven process and the oil industry uses it when it is in its best interest. However, in the Bakken, stabilization would cut into industry profits, so the bomb trains continue to roll by 25 million Americans every day.

Bill Lywood, who runs a consulting firm dealing in crude oil quality analysis, got right to the point with the Wall Street Journal earlier this year. “We need some standards. The industry should not be filling railcars with unstabilized crude,” Lywood said.

However, without regulations to require stabilization, this will continue. Which is why Goforth said the following to Reuters:

It's a little like the wild west up in the Bakken, where everybody gets to do what they want to do. In the Eagle Ford, you've got to play by the rules, which forces the oil companies to treat it differently.”

And with the North Dakota Industrial Commission in charge of any new rules, that is unlikely to change any time soon.

http://www.desmogblog.com/2014/10/07/wild-west-approach-regulation-bakken-means-bomb-trains-continue-roll

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PAUSE is a grassroots group of individuals who have come together to promote safe, sustainable energy and fight for environmental justice. We engage the greater public to stop the fossil fuel industry’s assault on the people of Albany and our environment.