- Associated Press - Tuesday, December 9, 2014

BISMARCK, N.D. (AP) - North Dakota regulators set new rules Tuesday that will require oil companies that are sending out millions of gallons of crude a week by rail to reduce the oil’s volatility before it’s loaded onto train cars.

The rules, developed over several months, have been criticized by North Dakota’s oil industry, which says the commodity is being unfairly singled out and warns that the new standards could slow production and increase costs.

State Mineral Resources Director Lynn Helms said that under the regulations approved by North Dakota’s Industrial Commission, all crude from the state’s oil patch would have to be treated by heat or by pressure to remove certain liquids and gases before being loaded onto rail cars. The rules take effect April 1.

Helms said the treated oil from North Dakota’s Bakken oil fields will not be inflammable, but will be more stable.

“This will significantly change the characteristics of (North Dakota) crude oil that’s going into market,” he told the three-member Industrial Commission.

Dozens of mile-long trains loaded with crude are leaving western North Dakota each week, each pulling more than 100 cars laden with about 3 million gallons of North Dakota crude. About 70 percent of the more than 1.1 million barrels of oil produced daily from the Bakken region is being moved by rail.

Oil trains that carry North Dakota crude through the U.S. and Canada were involved in at least 10 major accidents in less than two years, including an explosion in Lac-Megantic, Quebec, that killed 47 people.

The new rules will require North Dakota crude to have vapor pressure below 13.7 pounds per square inch, which is less than the 14.7 psi threshold that is recognized national standards as being stable. Winter blend gasoline that contains 10 percent ethanol is rated at 13.5 psi.

Helms has said about 80 percent of North Dakota crude already falls well below the proposed standard.

Ron Ness, president of the North Dakota Petroleum Council, has repeatedly said regulators are unfairly blaming crude oil when the focus should be directed at railroad safety.

Industry officials say stripping liquids and gases from Bakken crude would result in even more volatile products that would still have to be shipped by rail. It also would result in additional emissions due to heating the oil to remove gases, said Ness, whose group represents more than 500 companies working in the state’s oil patch.

Ness warned regulators in a letter to “remain cognizant of the unintended consequences that arise from field orders and rules that are too prescriptive and rigid.”

Among the reams of data-heavy testimony submitted to regulators on the issue in the past few weeks, Nancy Casler of Menands, New York, sent a picture of her 11-year-old son standing by railroad tracks as an oil train passed by the family’s home.

Casler, who urged North Dakota regulators to impose stricter standards on its oil, said trains carrying Bakken crude pass within 30 feet of her home en route to the Port of Albany.

She wrote that she recently installed a new lock on the front of her house “that is easier for my 11-year-old to manage so that if necessary, he could operate it himself and run away from the tracks.”


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