Why can't Bakken oil be made safer?

Readers of this blog got to know columnist Sara Foss of the Schenectady Daily Gazette on June 19 in Why You May Yet Read by Candlelight. I was hard on Sara because she asked the wrong question (can crude by rail ever be totally safe?) of the wrong person (an environmentalist nitwit). Well, guess what? Sara is back, asking more questions. But this time, she’s asking the right question on an important public policy matter. Let’s visit that topic.

The Wall Street Journal reported this week that producers of oil in the Eagle Ford Shale of South Texas have invested hundreds of millions of dollars the past few years to “stabilize” the light sweet crude they extract and make it safer to transport,  primarily by pipeline to Gulf Coast refineries. And then the Journal said: “In North Dakota’s Bakken Shale oil field, nobody installed the necessary equipment. The result is that the second-fastest growing source of crude in the U.S. is producing oil that pipelines often would reject as too dangerous to transport.” It’s Bakken oil that passes through Schenectady several times a day on CSX unit trains.

The stabilization process involves heating and pressurizing the oil to force out light hydrocarbons, such as ethane, butane, and propane, which can then be transported separately. These light hydrocarbons are the truly combustible components that make the light sweet crude coming from both Eagle Ford and Bakken susceptible to explosions in the event of a derailment. Heavy crude, such as from Alberta’s oil sands, is nowhere near as dangerous as the Bakken and Eagle Ford crude; as I’ve said before, you could probably blast such oil with a flamethrower, to no effect.

Now let’s go back to Sara Foss, who in her latest blog simply asks: “Why can’t our crude be as safe as the South Texas crude?” It's a question that deserves an answer.

Actually, the Journal says one stabilizer plant is about to open in North Dakota, by Caliber Midstream Partners, but it is not clear whether that processed oil will then go into pipelines or tank cars. Hess Corporation considered building a stabilizer at its loadout on BNSF Railway in Tioga, N.D., but decided one wasn’t necessary. But it does employ, the Journal said, a “more rudimentary process” that heats the oil to between 80 and 120 degrees Fahrenheit to strip out the lightest, most combustible components.

Why aren’t all the Bakken producers doing at least as much as Hess to make this oil safer, for both pipelines and rail cars? The chief of staff to Anthony Foxx says the secretary of transportation is open to ideas to improve the safety of moving oil. But government regulations don’t presently require stabilization.

The Eagle Ford producers appear to have made their stabilization investments willingly. It’s true that Eagle Ford oil is even lighter than what comes from North Dakota. So Bakken producers use this as their excuse for doing almost nothing. That will apparently remain the case until North Dakota's producers are moved to do otherwise.

So I’ll answer Sara’s question. The railroads could ask that the oil be stabilized, but their common carrier obligation to handle all business offered them perhaps prevents them from requiring such processing. Ditto the pipelines. And if the rails insist and pipelines do not, guess what happens then? So it appears to come down to government, in particular the Pipeline & Hazardous Materials Administration, which has the authority to order stabilization. But like the rest of the U.S. Department of Transportation, PHMA suffers from rigor mortis and the inability to make decisions and act upon them. This is the same agency that has been studying new standards for tank cars carrying crude oil for a year, since the explosion of a runaway oil train in Quebec that killed 47 people. If PHMA cannot decide on those standards in a year’s time, what hope do the people of Schenectady have of seeing safer crude oil pass through town? None, it appears. So if you know a way to jostle the bureaucrats out of their slumber, we're all ears. — Fred W. Frailey