BISMARCK – Oil companies are urging North Dakota regulators to scale back proposed standards for treating crude oil to make it safer for shipment, warning the rules could increase natural gas flaring and emissions, damage equipment and add costs that could threaten some operations.
The state Industrial Commission will hold a special meeting at 3 p.m. Tuesday to consider approving the oil conditioning standards, after delaying a decision at its Nov. 13 meeting to allow for more input.
Department of Mineral Resources spokeswoman Alison Ritter said there are updates to the order, but they won’t be final until presented to the commission, which consists of the governor, attorney general and agriculture commissioner.
The draft order presented in November would require equipment that separates fluids from gases such as butane and propane, and mandates that the equipment be operated within certain temperatures and pressures.
Operators would have to condition crude oil to a Reid vapor pressure of no more than 13.7 pounds per square inch. DMR Director Lynn Helms has estimated 80 percent of existing wells in the Bakken and Three Forks formations would meet that limit.
Comments from the North Dakota Petroleum Council support a vapor pressure limit closer to 14.7 psi, a national standard recommended by the American Petroleum Institute.
“North Dakota’s going to be setting the standard here, and it’s important that that be tied back to a national standard,” said Kari Cutting, the council’s vice president.
About a dozen oil companies submitted written comments on the proposed standards during the weeklong comment period, along with the API and NDPC, which represents more than 550 companies.
Petroleum Council President Ron Ness wrote that its members supports setting a target for vapor pressure “but oppose the micromanagement of how we reach that target.”
The methods prescribed in the order “will introduce new risks and unintended consequences to our operations,” including increased flaring, overheating of crude oil, greater fire danger at well sites and gas gathering pipelines exposed to temperatures above design, he wrote.
Requiring sampling and testing for vapor pressure at each well site would result in “a significant cost increase to operators that could impact the economic viability of some operations,” Ness wrote, suggesting allowing for testing at a central location.
Savage Services Corp., which operates a hub in Trenton that receives Bakken crude by truck and pipeline and loads it into trains, estimated that testing for vapor pressure by a certified independent lab would cost the company $96,000 per day, and installing vapor pressure monitors on all of its truck unloading bays would cost at least $1.2 million.
“We do not believe these significant costs are justified or appropriate,” senior vice president Nathan Savage wrote.
The order’s effective date of Feb. 1, 2015, also isn’t achievable, Ness wrote, explaining that procuring and modifying equipment could take nine to 15 months or longer because of the winter slowdown.
Writing in support of the stricter standards that were developed in the wake of several explosive train derailments, Nancy Casler of Menands, N.Y., who lives 30 feet from railroad tracks that carry Bakken crude to the Port of Albany, wrote that one of her biggest concerns “is that conditioning to remove light ends actually removes ALL light ends.”
She urged the commission to mandate newer methods for testing vapor pressure and noted that her village was conducting an evacuation drill to address the concerns of living in the path of crude oil trains.
“In fact, I recently installed a new lock on the front of my house that is easier for my 11-year-old to manage so that if necessary, he could operate it himself and run away from the tracks,” she wrote, including a picture of her son standing by the tracks as an oil train passed by.