This week's report by the North Dakota Petroleum Council that oil harvested from the Bakken shale formation isn't more dangerous for rail transport than any other light, sweet crude stands in contrast to statements by the U.S. Department of Transportation and railroad executives that Bakken light crude may be more flammable. Crude oil is normally considered a stable, less flammable product that has surprised industry officials by its level of volatility.
But, it's the mode of transport, not the characteristics of the oil, that makes Bakken crude appear more risky, a crude-by-rail expert said, concurring with the report.
"In reality, the Eagle Ford crude is actually more unstable than Bakken crude. But, it has very little shipping by rail. It's mostly done by pipeline," Taylor Robinson, president of PLG Consulting, said in an interview.
PLG is a boutique logistics consulting firm in Chicago that specializes in bulk commodities and has developed particular expertise in oil transport and distribution.
The Eagle Ford is a shale basin in Texas where similar hydraulic fracturing and horizontal drilling techniques are being employed to extract oil embedded within rock formations.
The issue is important because energy companies, in the absence of available pipeline infrastructure, are using large unit trains with dozens of tank cars to move oil from the Williston region of North Dakota to refineries on both coasts and the Gulf. In the past year, there have been several catastrophic accidents in which derailments caused large explosions, forcing regulators to scramble for safety solutions. Production stands at 1 million barrels per day and is expected to reach 1.5 million barrels by the end of the year as the production boom maintains its momentum in the Upper Great Plains.
The North Dakota Petroleum Council report
found that Bakken crude is consistent throughout the shale basin with only minor geographic variability in gravity and is comparable with other light, sweet crude oils. Light, sweet oil has much less sulfur content than heavy sour crude and is highly sought by refiners because it can efficiently be converted into high-value products such as gasoline, diesel fuel and jet fuel.
The study was conducted for the North Dakota Petroleum Council, which represents the interests of more than 500 companies involved in oil production and services, by Turner, Mason & Co. It conducted tests at 15 well sites and seven rail-loading facilities over a monthlong period.
The firm said Bakken has a gravity of 41 degrees, similar to other light crude variants, a vapor pressure 61 percent below the federal limit for liquid hazmat transport and a flashpoint within the normal range. It also determined that long transits did not change the characteristics of the oil at destination.
"All the shale plays are light and have a high revapor pressure. In comparison to other light shale, it [Bakken] isn't any worse. That's what the data points out. It's just that a lot is coming out of the Bakken in rail cars. There's not other play that has anywhere near as much oil shipped by rail," Robinson said.
The Permian Basin is another major area for shale-oil production. Until recently, oil was pumped there using conventional, vertical drilling. Permian oil is traded on exchanges as West Texas Intermediate.
Robinson noted that there are up to six different layers of shale below ground, each under slightly different pressure and geologic conditions, that can result in six different grades of crude.
"West Texas Intermediate has always been light, but it's never been shipped by rail. It's a new phenomenon that the Bakken has created," Robinson told American Shipper
One reason light crude is more volatile is that it contains natural gas liquids (NGL) like ethane and propane. Some separation of NGLs occurs at the well heads, but with limited processing facilities for the liquids, much of it is left in the crude, he explained.
The NDPC report determined that Bakken crude characteristics are within DOT specifications and design thresholds for safely transporting crude in older 111 railcars and that Bakken crude is properly categorized as a Hazard Class 3 Flammable Liquid that belongs in Packaging Group I or II.
“Since Bakken crude is no more dangerous than other products moved by rail, accident prevention efforts focused on track maintenance, staff training and train speeds will be the key to improving safety,” NDPC Vice President Kari Cutting said in a statement.
Earlier this month, the DOT required all railroads operating unit trains of 35 cars or more containing Bakken crude oil to notify State Emergency Response Commissions (SERCs) about the operation of these trains through their states. It also issued a safety advisory strongly urging those shipping or offering Bakken crude oil to use tank car designs with the highest level of structural integrity available in their fleets. The agencies also advised companies to avoid the use of older legacy DOT 111 or CTC 111 tank cars for the shipment of Bakken crude oil because of their thin skins that can lead to ruptures in derailments.
In April, the
Canadian government took several safety measures, including an immediate ban on the use of the least crash-resistant DOT 111 cars for moving hazardous material and phasing out older model cars within three years in favor of ones with new designs incorporating thicker shells and head shields.
A proposed DOT rulemaking that sets stricter design standards for tank cars is reportedly undergoing an inter-agency review before being published.