North Dakota oil and gas regulators have ordered operators to condition Bakken and Three Forks crude oil in an effort to improve the safety of transporting it by rail.
On Dec. 9, the state’s Industrial Commission voted to require Bakken petroleum system wells to use equipment that will separate the gas and liquid hydrocarbons and condition it to a vapor pressure of no more than 13.7 pounds per square inch, psi. The order will take effect on April 1, 2015, to allow producers time to install equipment or consider alternative methods.
North Dakota Department of Mineral Resources Director Lynn Helms brought the order before the commission saying that national standards set crude oil stability at a vapor pressure of 14.7 psi but the order takes into account that sampling and measuring equipment carries about a 1 psi margin of error.
“We want people to know that we’ve gone 1 psi below the standard so crude oil in North Dakota will be conditioned using separators and heater treaters … and it will meet stable crude oil standards,” Helms told the commission.
Determining ways to make Bakken crude safer for transport follows the fatal rail car disaster in Lac-Megantic, Quebec, and a train explosion near Casselton, North Dakota, in 2013 which have put the oil’s composition under heavy scrutiny.
Helms presented the commission with a proposed oil conditioning order at its November meeting, but the commission decided to open the case file for additional technical comments for one week. After considering the additional 141 pages of testimony from 25 groups and individuals, Helms made some technical corrections to the previous proposed order. The first was to drop the heating temperature of the fluids requirement from 115 or 120 degrees Fahrenheit to 110 degrees because the higher temperatures put the entire gas gathering system at risk. Pipeline manufacturers insist on a 120 degree maximum temperature of the fluids, but Helms said based on comments submitted and discussions with refinery officials, the commission could accomplish its conditioning goals with a 110 degree temperature requirement. The new order also adopts the American National Standards Institute measurement for vapor pressure versus a Reid vapor pressure as the latter is outdated.
More than half of equipment already compliant
After the case file was reopened in November, Helms sent his inspectors to check 300 heater treaters over a three-week period and found that 56 percent were already in compliance, 31 percent were using lower temperatures to heat the fluids but could potentially reach the vapor pressure standard, and one out of eight were not firing at all.
“We know from some modeling that an independent lab did for us, it’s very unlikely that at those temperatures we’re reaching that vapor pressure standard,” Helms said.
The initial order also required testing by an independent laboratory to ensure vapor pressure standards are met, but the new order now allows any properly trained personnel to administer the test since the state does not have enough testing facilities to provide the service. An operator may do its own testing and submit those results to the commission for approval. The order does not require testing at every well but rather at 960 custody transfer points where crude is loaded onto a truck to be hauled to market or where it enters a gathering pipeline.
No exemptions
The commission expects some operators to seek alternative methods for conditioning or stabilizing Bakken crude, and in such cases the operator must obtain approval from the commission through the hearing process. At the November meeting, Gov. Jack Dalrymple voiced some concern that operators may not be clear on the order’s wording and may think they could avoid conditioning in some cases. The new order makes that point “crystal clear,” which he likes.
“There is no situation in which it is not and I think that is an important point,” Dalrymple said. The order also prohibits blending hydrocarbon liquids prior to custody transfer, which Dalrymple said is a significant aspect of the order.
The previous order also brought several comments from the industry saying that the state did not have the right to preempt federal requirements. The new order does not require crude by rail facilities to test incoming crude and notify the commission of any violations of the order, but rather to only notify the commission if they discover any Bakken crude that violates federal crude oil safety standards.
The new oil conditioning rules will impact gas capture within the Williston Basin since more liquids will be moved to the vapor phase resulting in additional flaring. Helms admits it will be “significantly more difficult” for the industry to reach the gas capture targets set by the commission.
North Dakota Petroleum Council spokeswoman Tessa Sandstrom said the order is a “very technical, complex topic” that the industry will need to carefully examine and analyze.
Don Morrison of the Dakota Resource Council, a grassroots activist organization, said the rules and regulations are good, but the real issue is implementation.
“The track record isn’t very good,” he said. “But we’re hopeful that the rules will be enforced.”
The new standards were initially developed following a public hearing in September when numerous stakeholders provided technical testimony and crude oil quality and safety studies entered the record.
