Oil group wants highest-danger label for Bakken rail shipments

Tue Aug 5, 2014 12:40pm EDT
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NEW YORK Aug 5 (Reuters) - A U.S. oil industry group is recommending that all crude shipped by rail from North Dakota's Bakken fields be labeled as the most-dangerous type of oil cargo, a designation that could hasten the use of new or upgraded tank cars.

On Monday, the North Dakota Petroleum Council (NDPC) released the final results of a wide-scale study on the quality characteristics of Bakken crude, which has been involved in several fiery oil-train derailments over the past year.

The study confirmed preliminary findings released in May suggesting that Bakken was little different from other forms of light, sweet U.S. crude and posed no greater threat versus other fuels when transported by rail.

The NDPC also issued a series of recommendations following the study, however, including one urging oil-by-rail shippers to classify all Bakken crude oil as "Packing Group I" hazardous materials.

That is the highest-risk level of a three-tiered danger assessment, and the NDPC said it was recommended "even though the majority of samples tested for the study would fall within specifications for PG (Packing Group) II."

Current methods for testing boiling point, the key criteria for differentiating PG I and II classifications, can be inconsistent, the NDPC said. Because it typically contains a high proportion of very light hydrocarbons and petroleum gases, Bakken crude tends to boil at lower temperatures.

"The margin of error for the test methodology can result in different labs testing the same sample with values meeting both PGs. PG I has the more stringent standards and is therefore recommended to avoid further confusion," said the NDPC report, which was prepared by industry consultants Turner, Mason & Co.

Historically the Packing Group label has made no material difference in how oil is handled on trains; its only purpose was to inform emergency responders about the cargo. The DOT-111 tank car, the model used almost exclusively to ship oil by rail, is able to transport any Packing Group. Many oil companies have been using PG I routinely simply to ensure they were compliant.

But under new regulations proposed last month by the U.S. Department of Transportation, the Packing Group determination could become a pivotal factor in determining how quickly shippers use new or upgraded tank cars that will gradually replace older-model DOT-111s long seen as flawed.   Continued...