BISMARCK – North Dakota regulators foisted a new set of standards on the oil industry Tuesday aimed at further separating volatile gases from Bakken crude oil to make it safer for rail transport in the wake of several explosive train derailments.
“I think the important point is stabilization is going to occur one way or the other,” Gov. Jack Dalrymple said before the three-member Industrial Commission unanimously approved the oil conditioning standards.
The order approved by Dalrymple, Attorney General Wayne Stenehjem and Agriculture Commissioner Doug Goehring requires companies to use equipment that separates butane, propane and other gases from crude oil, and to operate that equipment within certain temperatures and pressures to lower the oil’s vapor pressure.
Currently, the only requirement is that the equipment be in good working order, Department of Mineral Resources Director Lynn Helms said.
“This will ensure that all of our Bakken and Three Forks crude oil has the same type of vapor pressure characteristics as the unleaded gasoline that you live with and work with every day,” he said. “It will not make it inflammable. That’s not the point. It will create a consistent, stable fluid.”
The volatility of crude oil being shipped by rail from North Dakota came under scrutiny after a deadly derailment and explosion in Canada, another fiery derailment near Casselton, N.D., and other incidents.
The standards will take effect April 1 instead of Feb. 1 as proposed in the original order presented to the commission Nov. 13. Commissioners delayed action at that time to allow for input from the industry and others.
The North Dakota Petroleum Council and more than a dozen individual oil companies had submitted comments warning that the standards could increase natural gas flaring, damage equipment, increase fire danger and threaten the economic viability of some operations.
Council spokeswoman Tessa Sandstrom said after Tuesday’s meeting that the industry group will carefully study the impacts of the revised order.
Among the revisions was that gas-liquid separators and heater-treaters must be operated at no less than 110 degrees instead of 115 or 120 degrees. Industry officials warned the higher temperatures could damage the gas-gathering system and clash with contract language.
The commission didn’t budge on the vapor pressure limit of 13.7 pounds per square inch – 1 psi below the national standard, Helms noted – but did agree to allow companies to do their own testing instead of requiring them to use an independent lab, which industry officials complained would be costly and slow.
Helms said his department has requested additional staff to enforce the new standards. Staff will check periodically to ensure companies are using approved testing methods.
He said the focus was still on safety, science and enforceability.
“We don’t think we’ve backed any of that out of the order,” he said.
Don Morrison, executive director of the Dakota Resource Council, a landowner and citizen group that has pushed for better oil stabilization, said, “We’re hopeful that the rules will be enforced.”
The order will require vapor pressure testing at 960 truck-loading facilities and meters where crude oil changes hands before it’s loaded onto trains, Helms said. An estimated 59 percent of the oil from the Williston Basin was shipped by rail in September, when North Dakota produced nearly 1.2 million barrels of crude oil per day, second only to Texas.
Based on a recent survey, Helms estimated about 45 percent of oil-producing facilities will have to add equipment or alter their practices, but he had no estimate of what the new standards might cost the industry.
He said the order will probably make it “significantly more difficult” for operators to reach the state’s goal of reducing natural gas flaring to 23 percent by Jan. 1 because of the additional gas entering the system. The flaring rate was 24 percent in September, the most recent figure available.
“It’s going to mean some slowdown, certainly,” he said.
The state hopes to reach a memorandum of agreement with the Fort Berthold Indian Reservation so it can apply the new standards statewide, he said.
Petroleum Council President Ron Ness has said that the order puts the focus back on the commodity when studies have shown that Bakken crude doesn’t pose a greater risk than other crude oils, and that the focus should be on preventing derailments.
Morrison disagreed, saying, “it has everything to do with what’s on the trains.”
“Kids’ toys and tables don’t explode,” he said, adding that the Industrial Commission has no authority over the railroads. “Saying it’s the railroad’s problem is passing the buck.”