After several major train accidents and fires involving crude oil from the fast-growing Bakken field in North Dakota, federal regulators stepped up rail inspections and issued a safety alert Thursday that Bakken oil could be more flammable than other types of crude.
The news affected shares of several large Bakken operators, including Oklahoma City's Continental Resources Inc. On a day where all major U.S. stock market indexes also fell, Continental shares were down 4 percent. Shares in EOG Resources Inc. dropped 2 percent.
The Pipeline and Hazardous Materials Safety Administration and the Federal Railroad Administration said they were increasing unannounced inspections and testing of trains carrying Bakken crude to make sure safety rules were being followed. The inspection program started in November.
The safety alert said shippers should properly test, characterize, classify and sufficiently degasify hazardous materials before and during transportation.
“PHMSA expects to have final test results in the near future for the gas content, corrosivity, toxicity, flammability and certain other characteristics of the Bakken crude oil, which should more clearly inform the proper characterization of the material,” the alert said.
Rapid development in the Bakken has outpaced pipeline infrastructure and crude oil is increasingly being transported by rail. Railroad tank cars are filled by either direct loading from a cargo tank or from bulk-storage tanks that may contain crude from different operators.
Continental said its testing shows Bakken oil has a lower sulfur element and a lower percentage of light ends — more volatile products — than West Texas Intermediate crude and other common oils. The company said it supported the more rigorous testing suggested by the federal safety alert.
“We have no way of knowing what other crudes, such as oil from older, non-Bakken wells, might have been blended with true Bakken oil, or otherwise how the oil has been handled and loaded post-sale,” said Warren Henry, Continental's vice president of investor relations. “It's completely logical to step up the testing and make sure product transported by rail is safe and properly loaded.”
A tank car can hold about 700 barrels of crude. Unit trains, or rolling pipelines, typically have between 100 and 120 cars of crude. Most of the unit trains go to refiners on the East or West coasts, but some travel to Oklahoma to oil storage terminals in Cushing.
Oklahoma Energy and Environment Secretary Michael Teague said Thursday his office was studying the federal alert.
“Regardless of how you're going to move petroleum products, you need to move it safely,” Teague said. “That's what our communities expect us to watch out for to make sure we're doing it safely. It's something we will continue to look at.”
Monday, a BNSF Railway train carrying grain derailed in southeastern North Dakota and fell onto an adjacent track carrying a BNSF train with 106 cars of Bakken crude. Eighteen of the oil train's cars derailed, and several burned in a major fire. Nobody was hurt in the accident, but nearby residents of Casselton, N.D., were evacuated as a precaution.
In July, 47 people died in Quebec after a train carrying Bakken crude oil derailed down a hill into the small town of Lac-Megantic. The resulting explosions and fires also destroyed many buildings in the center of the Canadian town.
CONTRIBUTING: Energy Editor