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Three Bakken Crude Shippers Face Penalties in Rail Probe

The U.S. Transportation Department's (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) has concluded an investigation launched last year looking at Bakken Shale crude rail shipments and said fines may be assessed against three shippers for allegedly not properly testing and classifying the crude.

Hess Corp., Whiting Oil and Gas Corp. and Marathon Oil Co. face fines totaling $93,000 from PHMSA's Operation Classification investigation conducted from August through November. The federal agency intends to send notices of the proposed violations to the three producers, according to U.S. Transportation Secretary Anthony Foxx.

"The fines we are proposing should send a message to everyone involved in the shipment of crude oil -- you must test and classify this materials properly if you want to use our transportation system to ship it," Foxx reiterated.

PHMSA inspectors tested samples from various points along the crude oil transportation chain, from cargo tanks that deliver oil, to rail loading facilities to the rail cars that would move the crude across the country.

"Based on test results, 11 of 18 samples taken from cargo tanks, delivering crude oil to the rail loading facilities, were not assigned to the correct packing group," a spokesperson said.

Continuing increases in Bakken crude rail shipments prompted the investigation, along with recent rail accidents, including one last summer at Lac-Megantic in Quebec (see Shale Daily, July 25, 2013). The rail cars were carrying misclassified crude supplies, according to authorities.

Another crude derailment the end of 2013 in Cassellton, ND, led DOT’s National Transportation Safety Board (NTSB) to issue three recommendations to the Federal Railroad Administration (FRA) and PHMSA, including one that required FRA and PHMSA to develop audit programs of shippers' and carriers' classification of hazardous materials (see Shale Daily, Jan. 23).

"These initial findings remind us how important it is to follow the hazardous materials regulations and to do it in the proper sequence," said PHMSA Administrator Cynthia Quarterman. "The process begins by testing, characterizing and then properly classifying the hazard and putting it in the kind of container that will offer the highest level of safety."

PHMSA now is expanding the scope of Operation Classification to include testing for other factors affecting proper characterization and classification, such as Reid vapor pressure, corrosivity, hydrogen sulfide content and composition/concentration of entrained gases in the material.

Foxx acknowledged the "important role" that transportation plays in helping the nation meet its energy needs through increased production of U.S. crude. However, he said DOT's top priority is "ensuring that it is transported safely."

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