NEW YORK Aug 5 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
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.
The NDPC represents major producers in the Bakken including
Marathon Oil Corp, ConocoPhillips, Continental
Resources and Hess.
Authorities had already begun to crack down on misclassified
oil shipments after the Lac Megantic tragedy in Canada last
year, when a runaway oil-train with cargo from the Bakken energy
patch derailed and killed 47 people in the center of a Quebec
In February, the DOT's Pipeline and Hazardous Materials
Safety Administration (PHMSA) fined three companies for using
incorrect Packing Group labels for their Bakken cargoes. Two of
them had mislabeled shipments as PG II, when in fact they should
have been labeled PG I. A third company had used a PG III label
rather than PG II.
The DOT rules last month said older model DOT-111 cars would
not be allowed to carry Packing Group I crudes within two years,
while less dangerous crudes that fall into PGs II and III could
still be shipped in the older cars for three and five years.
The rules are open to public comment and may not be
finalized for several months.
In its own study released last month, the PHMSA said most
crude from the Bakken tested as PG I or II material - "with a
predominance to PG I". It also said the oil was "more volatile
than most other types of crude," a finding disputed by both the
American Petroleum Institute and NDPC.
(Reporting by Jonathan Leff; Editing by Tom Brown)