U.S. tightens its controls on oil from the Bakken

The U.S. Department of Transportation recently issued an emergency order requiring shippers of Bakken oil to ensure that the substance is properly classified prior to transit.

The order comes nearly a year after 72 tank cars derailed in the Quebec town of Lac Megantic, sparking a massive explosion and fire that killed 47 people.

The crude oil in the tanker cars had come from the Bakken formation, a crude deposit that underlies subsurface portions of Saskatchewan, Manitoba, Montana, and North Dakota, the country’s second largest oil-producing state, where companies extract roughly one million barrels of crude per day.

Since several accidents have raised concerns about Bakken crude transportation methods — and the volatility the substance itself — some regulators are seeking safer methods of transport.

But several industry-funded studies say Bakken is no more dangerous or volatile than other U.S. crude.

According to Jeff Hume, vice chairman of the oil production company Continental Resources, current regulations suffice.

About 70 percent of North Dakota and Montana crude oil leaves by rail. North Dakota Petroleum Council Vice President Kari Cutting says shippers and producers are following government rules.

“All of those federal regulations that have been followed by Bakken, since we started producing Bakken — as far as classifying it, putting it in rail cars, moving it safely, all of the things that the shippers and producers have to do before it goes in to that railcar — all of those rules were followed,” Cutting said.

The safety concerns about rail have underscored the benefits of pipelines, but North Dakota State University economist Dean Bangsund describes the existing pipeline infrastructure as inadequate.

The proposed Keystone XL Pipeline would connect pipes from Canada to the southern United States and allow 100,000 barrels of Bakken crude oil to flow daily to a proposed link in the town of Baker, Montana.

“Some of the crude that is coming through the existing pipelines would get moved into that, therefore displacing and adding existing capacity to some of the pipelines we already have in place,” Bangsund said.

But concerns about the environmental risks of the Keystone XL pipeline have put it on hold. Though the cost to ship crude oil by rail is typically more expensive than pipelines, some companies still prefer that option because trains can reach more refineries than existing pipelines.

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