Officials discuss oil report results

Kari Bjerke Cutting, left, vice president of the North Dakota Petroleum Council, speaks during the release of a study on the volatility of Bakken Crude to the North Dakota Industrial Commission on Wednesday morning in the state capitol. "We don't know how you can single Bakken out," said Bjerke Cutting, citing how the report found no significant difference between Bakken crude and other crude oil being produced in the country. Also shown are Dennis L. Sutton, executive director of the Crude Oil Quality Association, center, and Jeff Hume with Continental Resources Inc.

BISMARCK, N.D. -- State officials decided Wednesday a public hearing is in order to determine if any new regulations may be necessary in ensuring the safety of crude oil shipped by rail from North Dakota.

The three-member North Dakota Industrial Commission unanimously moved to have a hearing scheduled after being briefed on an industry-funded report on the volatility of Bakken crude.

The report, contracted out to engineering firm Turner, Mason and Company, reported that Bakken crude is no more volatile than that found in other shale oil plays. The North Dakota Petroleum Council spent $400,000 having the company and SGS Laboratories do the study.

It drew its results by taking samples from 15 well sites and seven rail-loading terminals in the state over a month-long period earlier this year. Samples were tested to check characteristics, including the initial boiling point of the crude and vapor pressure.

The report comes after multiple train derailments occurred in the last year resulting in explosions of oil tanker cars carrying oil from North Dakota. One of the explosions in Lac-Megantic, Quebec, killed 47 people.

Another recent report on Bakken crude was released by the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. Its report states that Bakken crude is more volatile.

Dennis Sutton, executive director of the Crude Oil Quality Association of Findlay, Ohio, was hired as the lead consultant for the project. He provided an overview of the study results to the Industrial Commission.

“Bakken is not materially different … from other light crudes,” Sutton said. “The Bakken crude is extremely consistent across this entire basin and consistent from load point here in North Dakota to delivery point.”

Sutton said much of data in the report led to similar results of other recent studies including one by the PHMSA.

He pointed out that the Turner Mason study, for example, revealed an average vapor pressure of 11.5 psi in railcars, whereas the PHMSA report had it at 12.3 psi.

He said the average boiling point for Bakken crude and the flashpoint for the oil also were found to be within the normal range for light crude.

Attorney General Wayne Stenehjem was perplexed by the PHMSA report coming to a different conclusion.

“They really do seem to be picking on us,” Stenehjem said.

Stenehjem asked Sutton about how confident those who see the report can be of its results not being biased toward industry.

Sutton replied that the PHMSA study is a government study that used a different lab to test its samples than the Turner Mason study. Both studies resulted in similar results outside of the PHMSA study reference of Bakken crude being more volatile.

“The PHMSA report states that it is more volatile … but at this time have provided no supporting evidence for this claim,” Sutton said.

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Sutton also read off a series of recommended action steps for the state to consider. The recommendations are for ensuring that industry maintains best practices in operating its treating equipment at sites in order to reduce volatility of product.

The Industrial Commission instructed Department of Mineral Resources Director Lynn Helms to schedule a public hearing within the next month or so. The idea was to bring industry officials in to discuss best practices and determine whether any additional rules are needed to ensure the treatment, testing and shipping processes are as strong as they can be.

“We can make it as safe as possible,” Helms said.

North Dakota Petroleum Council President Ron Ness expressed surprise at the potential for regulatory moves.

“Here we go again,” Ness said.

His comment was made in the context of industry potentially addressing another regulatory matter, having dealt with issues such as flaring of natural gas in recent months.

Despite the possibility of regulatory actions, he said the report will provide a long-term benefit to industry. Ness said it provides refiners and shippers a clearer picture of the makeup of the product they’re getting to market.

The full report can be found at www.ndoil.org/resources/bkn.

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Reach Nick Smith at 250-8255 or 223-8482 or at nick.smith@bismarcktribune.com.

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