Bakken Crude Misclassified – PHMSA Fines

A press release from earlier this week from the Pipeline and Hazardous Material Safety Administration reports sheds some light on the progress of their on-going Operation Classification. This detailed checking of the crude oil coming from various sources in the Bakken Oil Filed was initiated after Canadian authorities discovered that the crude oil remaining is some of the car involved in the devastating crude oil train in Ontario early last summer was more flammable than the shipping paperwork would have indicated.

Civil Penalties for Mischaracterization

As a result of this still on-going investigation three companies have been issued notices of proposed violations (NPV) for mis-classifying crude oil shipments being transported to rail loading stations in the Bakken region. According to the press release those NPVs represent 18 specific instances of crude oil shipments being assigned to the wrong packing group. The proper packing group was determined by independent laboratory testing of samples given to PHMSA inspectors by truck drivers delivering the loads. The three companies were:

Whiting Oil & Gas: 1 violation, no previous violations, Packing Group (PG) II Crude Oil offered as PG III, proposed assessment $12,000.

Hess Corporation: 2 violations, no previous violations, 2 instances of PG I Crude Oil offered as PG II, proposed assessment $51,350.

Marathon Oil; 1 violation, no previous violations, 1 instance of PG I Crude Oil offered as PG II, proposed assessment $30,000.

Testing

PHMSA had multiple samples tested from each of these companies. The table below provides the data for the most hazardous sample tested; the other results from that company closely match this data.

	Flash Point	Boiling Point	PG by FP	PG by BP
Whiting	Less than 50 F	118 F	II	II
Hess	Less than 50 F	88 F	II	I
Marathon	Less than 50 F	89 F	II	I

The data from the Whiting NVP looks like Whiting may not have tested the crude at all and just went with data that they may have been using from other oil sources. The Hess and Marathon data looks to be a little more complicated. To understand this you have to know a little something about the test methods involved and the requirements of 49 CFR 173.121.

PHMSA rules use two criteria to determine the Packing Group assignments of flammable liquids, the flash point and the boiling point (BP). Flash point only allows you to discriminate between PG II and PG III; flashpoints above 73 F are classified PG III (as long as the Boiling Point is above 95 F). Boiling point is used to determine whether or not a flammable liquid is in PG I; any flammable liquid with a BP < 95 F is PG I.

Testing for flashpoint is relatively easy (though tedious). The equipment is relatively inexpensive and can be set up almost anywhere. The boiling point test method, on the other hand requires a gas chromatograph which is a relatively expensive piece of equipment requiring something approaching laboratory conditions and requires some technical training to operate and maintain. It is not unusual (but certainly not proper) for people in the chemical industry to do their classification based solely upon the flash point testing making the assumption that their boiling point is greater than 95 F. It appears that that is what Hess and Marathon have done.

According to the Operation Classification web site (‘Rail Packaging Requirements’ pull down), the only practical difference in the shipping requirements (by rail) for the various classifications of crude oil is the type of rail car that is authorized for carrying the material. Presumably the lower PG rating allows for the use of less demanding safety measures and that is supposed to be reflected in the type of rail car that can be used. Note that the ‘infamous’ (in the press anyway) DOT 111 rail cars can be used for all three packing groups for crude oil, though the railroads recommend that the older, less safe, DOT 111 cars only be used for PG III materials.

Takeaway

It certainly looks like the NVPs for these three companies are deserved. It should serve as a wakeup call to the chemical industry as a whole that the proper classification of all flammable liquids requires the testing of boiling points. I am sure (okay, I hope) that the oil companies operating in the Bakken area at least are taking this seriously.