Western Railroad Discussion > New rules for Bakken crude

North Dakota has issued new proposed rules for Bakken crude shipped out of state. The rule would require that all crude be heated and tested, and that which contained excess levels of butane, propane, etc (often referred to as gassy liquids, or natural gas liquids) be treated and those elements removed.

The rules are consistent with an earlier requirement that flaring off of natural gas liquids be eliminated and the liquids captured for shipment. I haven't compared them to the federal pipeline safety administration's offer of a waiver to common carrier rules, but they seem consistent with those requirements, too.

On the surface, this seems to be a rule that will reduce the likelihood of serious explosions, fire, etc. It would also seem that the rules could qualify the resulting product as condensate if they can get the specific gravity low enough. That would be huge for railroads carrying exportable processed products.

>>The proposed new rules would require every barrel of oil produced in the state to undergo some kind of treatment. It would require North Dakota oil be treated at temperatures of at least 115 degrees Fahrenheit and pressures of at least 50 pounds per square inch (psi).

The goal would be to produce a barrel of Bakken crude with pressure of no more than 13.7 psi, similar to 13.5 psi for most automobile gasoline.

"We already believe the vast majority of our Bakken crude oil falls well below the standard," Helms said. "But there are times and places where the standards aren't met, and we want that to happen less and less."<<



more

http://www.reuters.com/article/2014/11/13/north-dakota-oilstandards-idUSL2N0T32F420141113

About time.

Bob

ATSF100WEST......Out

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Since there is no pipeline to move the gasses to market the BNSF can install a processing plant and have a ready supply for their LNG locomotive fleet.

Posted from Windows Phone OS 7

fbe Wrote:
-------------------------------------------------------
> Since there is no pipeline to move the gasses to
> market the BNSF can install a processing plant and
> have a ready supply for their LNG locomotive
> fleet.
>
> Posted from Windows Phone OS 7


Not a bad idea. But I suspect North Dakota would be happier if somebody built a plastics etc plant right there, and put those well paying jobs in the state.

A point to consider here is that Bakken crude is not a cheap crude to drill for and produce. All crude oils that require fracturing are. As oil prices continue to slide, the additional costs to reduce the volatility of Bakken crude and others that have basically normal volatility may price those crudes out of the market. It is sort of like playing Jenga or pick up sticks, one little thing might cause the whole structure to collapse. If you think that the large OPEC producers are not hoping for something like that to recapture their market share in the USA, think again. Far better to restrict oil trains to certain routes where the track structure can be effectively patrolled and maintained, and to put better operating rules in place for oil trains, than to try to reduce volatility of a pretty much normal crude oil that just happens to be shipped by rail, rather than pipeline.

elueck Wrote:
-------------------------------------------------------
> A point to consider here is that Bakken crude is
> not a cheap crude to drill for and produce. All
> crude oils that require fracturing are. As oil
> prices continue to slide, the additional costs to
> reduce the volatility of Bakken crude and others
> that have basically normal volatility may price
> those crudes out of the market. It is sort of
> like playing Jenga or pick up sticks, one little
> thing might cause the whole structure to collapse.
> If you think that the large OPEC producers are
> not hoping for something like that to recapture
> their market share in the USA, think again. Far
> better to restrict oil trains to certain routes
> where the track structure can be effectively
> patrolled and maintained, and to put better
> operating rules in place for oil trains, than to
> try to reduce volatility of a pretty much normal
> crude oil that just happens to be shipped by rail,
> rather than pipeline.

I'd agree with just about all of this, but note that the responsibility for making rules is shared among the pipeline administration, the FRA, and the state. And ultimately Congress. Enbridge let the cat out of the bag with its successful request to refuse oil that had higher levels of butane, hydrogen sulfide, etc than it was willing to ship. From a legal standpoint, it means that everybody else could be under the gun if something horrific happens on their watch.

Shoving two million pounds of sand / proppant into the hole is expensive (but great for the railroads). No way it will ever be as cheap to extract oil in North Dakota as Kuwait, etc. But oil in North Dakota, Permian, the Denver-Julesburg etc is essential to our national security.