Paula Dittrick, Editor
Oil producers in the Bakken, Three Forks, and Sanish plays could face new transportation safety regulations from the North Dakota Industrial Commission that would set operating standards for oil-conditioning equipment at the well to separate production fluids into gas and liquid.
If finalized, the proposed rules as outlined in Order No. 25417 would become effective Feb. 1, 2015.
On Nov. 13, the Industrial Commission advanced a working draft that includes parameters for temperatures and pressures under which equipment must operate to ensure light hydrocarbons are removed before oil is shipped.
Kari Cutting, vice-president of the North Dakota Petroleum Council, said regulators focused on crude oil rather than the safety of trains transporting Bakken crude.
"We support the setting of a vapor-pressure specification," Cutting said. "But the additional stipulations are evidence of putting the responsibility back on the commodity."
She said the proposals, as outlined in mid-November, could "micromanage" Bakken oil producers. The proposed regulations specify a process that requires operators to run crude through equipment heating the crude to force gases from the liquid.
A final commission decision was expected in December. In September, North Dakota state officials heard testimony during a public hearing in Bismarck on possible steps to reduce volatility before oil is stored or transported.
Trains carrying crude have been involved in major accidents during the last 18 months, including an explosion in Lac-Megantic, Quebec, that killed 47 people.
The Energy Information Administration said in a daily briefing on Nov. 13 that the volume of oil and petroleum products shipped on the US rail system increased 13% through the October 2014 compared with the same period for 2013.
EIA attributed this largely to North Dakota's Bakken shale formation, where pipeline takeaway capacity is limited.
Helms comments
North Dakota Mineral Resources Director Lynn Helms told reporters he believes most crude from the Bakken formation would fall "well below the standard," and that the proposed regulations would ensure oil was "in a stable state" before being moved by rail.
His department drafted the proposals. Helms noted, "There are times and places where the standards aren't met, and we want that to happen less and less."
During a news conference in November, Helms estimated 15% of existing Bakken producers lack the equipment needed under the proposals. Those producers would have to submit to quarterly tests to demonstrate oil from their wells meet the state's proposed rvp limit of no more than 13.7 psi.
National standards identify crude oil to be stable at 14.7 psi rvp, the Industrial Commission said in a news release.
The proposed standards would prohibit blending condensate or natural gas liquids into crude, and rail loading terminals would be required to tell state regulators about any oil received that exceeded the vapor pressure limits.
Helms said staff from his department would conduct field inspections to enforce compliance if the order is approved. Oil companies that do not comply could face a fine of up to $12,500/day.
The Industrial Commission issued a statement in November saying, "These new standards will create a consistent barrel of Bakken crude" for transportation safety.
"When completed, we believe this order will give operators the flexibility they need to meet the new standards while also improving the safety of oil that is transported through communities," said the commission. Gov. Jack Dalrymple chairs the three-member commission.
North Dakota Att. Gen. Wayne Stenehjem and Agriculture Commissioner Doug Goehring are the other two commissioners.
Proposed stipulations
A working draft of the order said all wells completed in the Bakken must be produced through equipment with the following conditioning standards:
• A gas-liquid and emulsion heater-treater of ample capacity and in good working order that separates production into gaseous and liquid hydrocarbons.
• Gas-liquid separator or emulsion heater-treater equipment operating at a pressure of no more than 50 psi must heat the produced fluids to at least 115° F. Such temperature may be applied in the emulsion heater-treater or before the fluids entering the separator if no emulsion heater-treater is used.
• Gas-liquid separator and emulsion heater-treater operating at a pressure greater than 50 psi but no more than 75 psi must heat the produced fluids to at least 120° F.
• Production equipment not using a gas-liquid separator and emulsion heater-treater only will be approved by the commission after due notice and hearing. It must be capable of delivering crude oil with a rvp no greater than 13.7 psi at custody transfer or must provide safe transportation of marketable crude oil to a conditioning or stabilization plant.
