The Federal Energy Regulatory Commission, FERC, ruled on June 6 in favor of Enbridge Pipelines (North Dakota) LLC on that company’s request to lower acceptable hydrogen sulfide levels in crude oil delivered to its Berthold rail loading facility from 10 parts per million down to 5 ppm. FERC also ruled an effective retroactive implementation date of May 9, the effective date that Enbridge had first requested in its initial May 8 filing on the issue.
Under the FERC ruling, Enbridge would automatically accept crude oil at its Berthold terminal with hydrogen sulfide concentrations below 5 ppm. However, Enbridge now has discretion as to whether it accepts or rejects crude shipments with hydrogen sulfide concentrations at or above 5 ppm.
As Petroleum News Bakken reported on May 26, the issue arose after Enbridge measured hydrogen sulfide, a highly toxic gas often found in crude oil, in one of the Berthold facility’s storage tanks on May 5 at a concentration of 1,200 ppm. That concentration is nearly two orders of magnitude above the concentration of 20 ppm, the maximum level to which workers can be exposed to hydrogen sulfide during any part of a work day according to the Occupational Health and Safety Administration.
Protest by Plains Marketing
The ruling comes as a defeat for several of Enbridge’s shippers who protested the request based on several arguments. As previously reported in an initial May 10 filing, Plains Marketing LP filed a protest arguing that the lower hydrogen sulfide level was inconsistent with other pipelines operating in North Dakota, which it said adhere to a 10 ppm acceptable level. Plains also argued that Enbridge’s initial request for the new standard to be imposed with only a one-day notice did not allow shippers any time to adjust operations. Plains also initially argued in its May 10 filing that Enbridge had provided no justification as to why the lower standard of 5 ppm is necessary or appropriate to address workers’ health and safety, and asked that FERC reject the new, lower standard.
But in a subsequent filing on May 29, Plains withdrew its motion asking that FERC reject the lower standard of 5 ppm. However, Plains did ask FERC to delay any implementation of the new standard until May 18 rather than May 9 as Enbridge had requested. Plains also asked FERC to set up a technical conference with Enbridge and its shippers so that Enbridge could discuss the procedures that it would employ if it receives notification of a crude shipment exceeding the new 5 ppm standard. Plains further asked that FERC require Enbridge to maintain a record of its decisions on all notifications that crude shipments exceed 5 ppm.
Other protests
Plains was not the only Enbridge shipper that protested the lower hydrogen sulfide level. Between May 15 and May 23, Hess Corp., Murex Petroleum and Marathon Petroleum all filed motions with FERC to intervene in the matter.
As previously reported, Hess filed a motion to intervene on May 15, although Hess did not provide arguments in its filing.
Murex argued that FERC should reject Enbridge’s lower sulfide level because Enbridge had not justified the short notice filing, had not justified the lower level of 5 ppm, and had not provided sufficient detail regarding the testing of hydrogen sulfide and acceptance for transportation.
In its motion to intervene, Marathon said that, as the owner of refineries as well as a consumer and shipper of crude oil transported on Enbridge’s system, it has a substantial economic interest in the outcome of the matter. Marathon said that the lower sulfide level could adversely impact its suppliers as well as the company’s relationship with its suppliers.
Enbridge responses
Enbridge submitted responses to all of the protests in separate filings to FERC on May 14, 17 and 28. Enbridge pointed out and reiterated the dangers associated with hydrogen sulfide, especially at the concentration that it was measured in an Enbridge storage tank at the Berthold facility. In addition, Enbridge said that high concentrations of hydrogen sulfide in crude oil could jeopardize downstream shipping on other carriers’ systems.
However, in its filings Enbridge did say it would not necessarily reject crude oil with hydrogen sulfide concentrations exceeding 5 ppm, but instead would look at each shipment on an individual basis to determine if the crude oil could be transported without posing a health and safety hazard to its employees.
FERC sides with Enbridge
In the end, FERC sided completely with Enbridge and rejected all of the arguments presented in the motions to intervene. In its June 6 the ruling, FERC said that it recognized the dangers posed by exposure to hydrogen sulfide, and felt that Enbridge was justified in seeking the lower acceptable level.
FERC said in its June 6 ruling that “Exposure to hydrogen sulfide at levels of 100 ppm can cause death; however, OSHA states exposure to hydrogen sulfide levels of 700-1000 ppm causes rapid unconsciousness, or immediate collapse within 1 to 2 breaths and death within minutes. Exposure to levels over 1000 ppm can cause nearly instant death.”
“The test at the Berthold facility revealed levels in one holding tank at 1200 ppm,” the FERC ruling continued. “It would appear that this level is far above anything considered ‘safe.’ Based on these exposure dangers and the results from Enbridge’s test at the Berthold facility, the Commission concludes that there is sufficient justification to allow Enbridge to implement its proposed hydrogen sulfide standard to ensure safe operation of its system and the health and safety of its employees.”
Furthermore, FERC said it would not impose any additional restrictions on Enbridge nor would it require a technical conference between Enbridge and its shippers as requested by Plains. “The Commission finds Enbridge’s representations to work with shippers to permit transporting crude above the 5 ppm limit reasonable. If shippers believe that Enbridge’s procedures to accept non-conforming crude are insufficient or are operating in a discriminatory manner, they may file a complaint.”
Finally, FERC granted Enbridge’s request for an implementation date retroactive to May 9. “The Commission recognizes that placing this tariff into effect on one day’s notice may have caused some difficulties for shippers who may have had crude that did not meet the new 5 ppm hydrogen sulfide standard. However, in the situation presented here the Commission must place health and safety concerns above commercial matters.”
The FERC ruling concluded by saying that Enbridge clearly stated that it will work with shippers to enable shipments of crude with hydrogen sulfide concentrations exceeding 5 ppm, and the commission “expects that Enbridge will live up to its representations.”
