A tanker train carrying North Dakota Bakken crude oil burns after derailing in western Alabama outside Aliceville, Ala. in November. Credit: Alabama Emergency Management Agency
As federal regulators continue investigating why tank cars on three trains carrying North Dakota crude oil have exploded in the past eight months, energy experts say part of the problem might be that some producers are deliberately leaving too much propane in their product, making the oil riskier to transport by rail.
Sweet light crude from the Bakken Shale formation straddling North Dakota and Montana has long been known to be especially rich in volatile natural gas liquids like propane. Much of the oil is being shipped in railcars designed in the 1960s and identified in 1991 by the National Transportation Safety Board as having a dangerous penchant to rupture during derailments or other accidents.
While there’s no way to completely eliminate natural gas liquids from crude, well operators are supposed to use separators at the wellhead to strip out methane, ethane, propane and butane before shipping the oil. A simple adjustment of the pressure setting on the separator allows operators to calibrate how much of these volatile gases are removed. The worry, according to a half-dozen industry experts who spoke with InsideClimate News, is that some producers are adjusting the pressure settings to leave in substantial amounts of natural gas liquids.
“There is a strong suspicion that a number of producers are cheating. They generally want to simply fill up the barrel and sell it—and there are some who are not overly worried about quality,” said Alan J. Troner, president of Houston-based Asia Pacific Energy Consulting, which provides research and analysis for oil and gas companies. “I suspect that some are cheating and this is a suspicion that at least some refiners share.”
Harry Giles, a now-retired, 30-year veteran of the Department of Energy whose duties included managing the crude oil quality program for the Strategic Petroleum Reserve, said there’s “a distinct possibility” that propane has been intentionally left in Bakken oil.
“I think there is such a large focus on what’s happening in the Bakken…that no one really cares to talk about these issues,” Giles said.
Producers might be tempted to leave in some of the natural gas liquids because there aren’t enough gas-processing facilities or pipelines in the Bakken to handle all the methane, ethane, propane and butane that is suspended in the crude when it comes out of the ground. Without sufficient infrastructure, operators are left with few options. They can flare or vent the volatile gases into the North Dakota sky, although they risk being penalized for violating emission limits. Or they can leave some of the gases, especially propane, suspended as liquid in the crude oil they send to refineries, where gas-processing facilities already exist.
Some drillers might also be purposefully selling their crude “fluffed up” with propane and small amounts of butane to boost the volume of oil in the railcar and maximize their profits, according to the experts, some of whom spoke on the condition they not be identified because of pending lawsuits triggered by recent accidents.
The Bakken, a vast crude reservoir lying about two miles beneath the Earth’s surface, has been tapped since 1953. It was only in recent years that new fracking technologies allowed the volume of crude taken from the ground to explode, jumping from a negligible amount in 2007 to 1 million barrels a day currently.
Energy companies have been scrambling to install the infrastructure they need to support the boom. But they face awkward economics. Constructing gas plants and pipelines is expensive and involves a lengthy permitting process. By the time the facilities are in place, production at many Bakken wells might be in decline. Shale gas production can drop off sharply in the first few years.
Lynn Helms, head of the North Dakota Department of Mineral Resources and the state’s chief oil-well regulator, said in a statement emailed by his spokesperson on Feb. 26 that “at this time we are investigating what, if any, issues there may be surrounding separation of Bakken streams.”
At the federal level, the movement of crude oil by rail is regulated by the Federal Railroad Administration and the Pipeline and Hazardous Materials Safety Administration (PHMSA), both housed within the Department of Transportation.
PHMSA officials did not respond to questions about whether the agency is investigating Bakken oil companies for deliberately leaving too much propane in their crude. The American Petroleum Institute, which has been assisting PHMSA in its effort to determine what new rules or testing methods are needed, declined to comment.
PHMSA began testing Bakken crude to see what was making it so volatile after an oil train from North Dakota derailed and exploded in Canada in July, killing 47 people and generating up to $2 billion in liabilities. In response to questions from InsideClimate News about what is making the Bakken crude explosive, PHMSA spokesman Gordon “Joe” Delcambre said in a Feb. 14 email that the agency is “still awaiting the final report of the test results on the crude oil samples submitted to the lab. Keep checking back periodically.” As of Wednesday, PHMSA had provided no update.