Safety debate eyes taming Bakken crude before it hits rails

Mon May 12, 2014 12:41pm EDT
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By Kristen Hays

HOUSTON (Reuters) - After a spate of fiery derailments, the scramble to make North Dakota's Bakken crude oil safer when it's being transported on trains has focused on better tracks, slower speeds, and reinforced railcars that bypass urban areas.

But that is starting to change. A potentially more effective approach, which would remove the most volatile elements from the crude before it is being loaded onto rail cars, is now beginning to get attention, both from regulators considering safety enhancements and some lawmakers, industry executives say.

It is too soon to say if regulators, who say all options are on the table, will end up requiring Bakken crude to be stripped of flammable natural gas liquids (NGLs) before it moves by rail.

But degassing Bakken crude for rail would be costly.

Companies would need to spend potentially billions of dollars on small processing towers known as stabilizers that shave off NGLs from crude and build pipelines to carry the NGLs to a viable market.

Right now, little of that infrastructure exists in the Bakken, which produces about 950,000 barrels of crude per day for thirsty coastal refineries, with some 67 percent of that moving by rail.

"The issue of whether or not producers should be required to stabilize the product after it comes out of the wellhead and before it's loaded into a railcar is starting to come up in conversations at the Senate staff level," said a refining industry executive in Washington.

The flammability of crude and the quality of what goes into railcars is on the table for the industry and regulators working to improve safety, said Greg Garland, Chief Executive Officer of refiner Phillips 66, when asked if he could see infrastructure added in the Bakken to remove NGLs.   Continued...

The remains of a burnt train are seen in Lac Megantic, July 8, 2013. REUTERS/Mathieu Belanger