The North Dakota Industrial Commission wants to ship out the safest Bakken barrel of oil as possible, but needs more facts to effectively do so.
On Aug. 6, the commission held a special meeting to hear the final results of a Bakken crude oil study administered by Turner, Mason and Co. In addition to confirming the initial findings presented in May that Bakken crude is not more volatile or flammable than other light, sweet crude, the final report also detailed recommendations that could be implemented in the field to ensure consistent operation of treating equipment, Bakken crude oil quality and testing procedures and shipping classification. The commission plans to use the recommendations as a basis for a public hearing to be scheduled by the Department of Mineral Resources, DMR, Oil and Gas Division. By gathering input, the commission hopes to develop best practices in the form of an order or possibly an emergency rule to reduce the volatility of crude oil at North Dakota well sites.
“These recommendations are a great starting point and a center point for something to be built around, but it’d be good to get other viewpoints if they are out there,” DMR Director Lynn Helms told the commission. “We may see that we can’t make any significant difference, but what I see in the data is that we can. We can make it as safe as possible.”
Helms said the study showed great sampling and lab analysis but he plans to ask more detailed questions about the findings at the upcoming hearing. Attorney General Wayne Stenehjem asked Turner, Mason presenter Dennis Sutton how the commission could be assured the study was unbiased since it was commissioned by industry. Sutton noted Turner, Mason’s good reputation and also that the analysis was done by a third party, independent laboratory.
“Our report … is rather tedious of every sample. We did not cherry pick the data; it’s all there for review,” Sutton said.
He also noted that sample results were very similar to the Pipeline and Hazardous Materials Safety Administration’s, PHMSA’s, study, but the conclusions drawn by PHMSA are “totally unsupported by data in their report,” Sutton said. “They state the Bakken is more volatile than most other types of crude but they have not, at this time, provided any evidence of that.”
Gov. Jack Dalrymple told Sutton he was puzzled as to why recent proposed rail regulations by PHMSA singled out Bakken crude. Sutton did not have a definitive answer, but assumed it was because of the large volumes of Bakken crude moving by rail.
“They do seem to be picking on us,” Stenehjem said. “And it’s not just a quantity issue I’m seeing. I think they are attempting to portray this as a quality that’s different.”
Agriculture Commissioner Doug Goehring agreed, wondering why PHMSA’s study shows the same data results but that they are deriving a different conclusion.
“It almost sounds like they are trying to make something up,” he said.
“I think they are trying to paint a picture incorrectly that the world of crude looks like this, and Bakken is out here,” Sutton said as he gestured. “I do not believe that’s correct. I believe there’s a very wide variety of crude oil and Bakken is in that range.”
Dalrymple said one thing the state can do is regulate oil conditioning which partly entails increasing the temperature of the oil to remove the volatile gases. But industry representatives said while the higher temperatures will lower the crude’s vapor pressure, optimal pressures at the well site may not be optimal for sending it to market since pipelines need the product to be at certain pressures in order to push the product to a plant.
“If you can get it to atmospheric pressure, that would be wonderful and you’d liberate a lot of gases,” said Steve McNally, Hess Corp. general manager, North Dakota. “The difficulty is that you could not get it into the pipeline. … If you don’t have that higher pressure, it can’t get into the line and it goes to flare.”
McNally also noted that when temperature is increased to remove the gases, it can negatively impact any downstream equipment as pipelines have a maximum operating temperature of 120 degrees. So by keeping temperature and pressure levels adequate for each process, oil conditioning would not make a material impact on the flammability in the crude.
“What it will do is add significant cost to each individual well,” McNally said. “And as you add individual cost, it makes it more problematic for those wells to be economic.”
Dalrymple said the commission would have to address that by further understanding of the process.
“In my opinion, we’ll have to do as much as we possibly can without being completely infeasible from an economic standpoint,” Dalrymple said. “If we can lower the vapor pressure, I think we want to do that.”
Continental Resources’ Jeff Hume told the commission that the equipment being used in the field to lower vapor pressure is a “mixed bag” but the industry has tried to develop best practices that fit any type of equipment.
“We are meeting the regulations … and we think we can be a little bit better by following these standards,” Hume said.
When asked if he felt there was anything that could be done to make the oil safer, Hume replied, “I don’t know that we can. I think we can get as much of the light ends out as we can, make it as safe as possible, but it’s still flammable.”
The commission is eager to learn more about the potential of Bakken crude conditioning from all interested parties through the public hearing.
“We want to make sure we’re following science,” Stenehjem said. “It would be nice if PHMSA and those making claims about our crude oil had some science to prove it. Facts are facts, and we will have to respond accordingly and we will.”
