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Bakken Crude Same as Crude Ever Was, Says Report

Preliminary results of an industry-backed study show that crude oil from the Bakken/Three Forks formation poses no more risk in rail shipment than other fuels. The report, unveiled Tuesday at the Williston Basin Petroleum Conference, is the second this month with the same findings.

Contrary to concerns raised by federal regulators in the past year after a series of crude rail car mishaps in Canada and the United States, the independent study by Turner, Mason & Co. for the North Dakota Petroleum Council (NDPC) showed that Bakken crude is consistent throughout the basin with only "minor geographic variability" in gravity.

Earlier this month the American Fuel & Petroleum Manufacturers issued a report commissioned by the U.S. Department of Transportation (DOT) that also found crude oil from the Bakken was not significantly more dangerous than other crude that is transported by rail (see Shale Daily, May 15). DOT has been investigating a series of train derailments involving rail cars containing Bakken crude. The investigation is part of DOT's Operation Classification, also known as the "Bakken Blitz," (see Shale Daily, Feb. 26; Jan. 3). Earlier this month, DOT issued an emergency order advising against the use of older, more vulnerable railroad tank cars for shipment of Bakken Shale crude, and requiring railroads operating trains carrying large amounts of Bakken oil to notify states when the trains are moving through their states (see Shale Daily, May 7).

Jeff Hume, vice chairman for strategic initiatives at Continental Resources Inc., one of the biggest Williston Basin oil producers, said the independent, controlled samples from 15 different production locations and seven rail shipping sites found that the characteristics of Bakken/Three Forks crude meet existing federal transportation criteria for rail shipments of crude oil. The results would establish a new baseline, on which Bakken crude characteristics would be judged, he said.

"This is the third independent study to confirm that Bakken crude does not significantly differ from other crude oils and poses no greater risks than other flammable liquids authorized for rail transport," said NDPC Vice President Kari Cutting.

In Hume's outline of the study, Bakken crude was shown to look like other U.S. crude in API gravity (41 degrees), average vapor pressure (11.5-11.8 psi), flashpoint (less than 73 degrees F), boiling point (99.6 degrees F), and average sulfur weight (0.14, or low corrosivity). "The Bakken vapor pressure is 61% below the threshold limit for liquids under the Pipeline and Hazardous Material Safety Administration's [PHMSA] regulations," Hume said.

Cutting said the characteristics verified by the sampling all "fall within specifications and design thresholds" to safely transport crude oil in existing DOT 111 (design) railcars.

She told NGI's Shale Daily that the oil and rail industries need to have more discussion on this issue, and she added that newer, heavier rail crude cars would necessarily mean smaller capacity cars, which could affect the economics of rail crude transports at a time when the projections indicate significant increases in U.S. crude oil production over the next five to seven years.

"I believe federal regulators said that Bakken crude may be more flammable or volatile than other crudes, and that is why there was a very strong push for more samples of the Bakken supplies," Hume said. "This study is going to go a long way in providing them that sort of information. If I sent data [to PHMSA] from my company, and eight other companies sent them data, it is questionable whether that data would really be trustworthy, but this study is from controlled testing by an independent laboratory [subcontracted by Turner, Mason to SGS Laboratories] that collected each sample from well tanks, keeping it under controlled conditions all the way through testing."

In a separate presentation, PHMSA's Kip Wells, central regional director for enforcement, said the federal agency's investigatory work so far has found that Bakken crude is not the problem and was never the cause of the rail car incidents. The focus needs to be on rail cars and the rail transportation, which for crude is not going to decrease, Wells said.

Hume contends that questions about future rail cars and railroad track maintenance and operations will be answered in other venues.

Also on Tuesday, 150-year-old oil and gas industry testing company Inspectorate, a core part of the Bureau Veritas commodities division, said it plans to open an analytical laboratory in North Dakota specializing in the analysis of crude oil and gas produced from the Bakken. "The new laboratory will provide support services for oil and gas drillers, shipping companies and traders needing real-time data for crude oil quality in North Dakota," a spokesperson said.

"The opening of the Williston facility confirms to our clients our commitment to support their needs in the region," said Inspectorate America Corp. President Kevin Somers. "With the opening of our first testing facility in North Dakota, Inspectorate now ventures into yet another new space to ensure best practices in testing and inspection are carried out in the booming shale industry."

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