Saturday, April 4, 2015

HR 1679 Introduced – Bakken Crude

As I had mentioned earlier Rep. Garamendi introduced HR 1679, the Bakken Crude Stabilization Act of 2015. The bill attempts to reduce the risk of shipping crude oil from the Bakken reserve by requiring a reduction in the volatility of the crude oil by specifying a maximum Reid vapor pressure (RVP) of 9.5 pounds per square inch (psi). All Bakken crude oil shipped 90 days after the bill is adopted would have to meet this new standard {§2(b)}.


The bill specifically applies the new shipping safety criteria only applies to “Bakken crude oil” {§2(a)}. Crude oils from other sources with higher RVP could still be shipped. If RVP is a measure of crude oil transportation safety, then it should be applied to all crude oils, not just Bakken crude.

The 9.5 psi standard is, according to the bill {§2(a)}, based upon a standard promulgated by the New York Mercantile Exchange (NYMEX) in crude oil futures contracts. While no reference is give a search of futures contract definitions shows that there is just one contract standard that does contain this requirement, but it only applies to Light Sweet Crudes from Texas, Oklahoma or New Mexico. Other crude oil contract definitions (see here, here and here) do not contain product quality specification of any sort and certainly not RVP standards.

Reid vapor pressure (ASTM D323) only provides a measure of vapor pressure at a single temperature 100° F (37.8°C). The American Fuel & Petrochemical Manufacturers in a study they conducted for PHMSA measured RVP on 807 Bakken crude oil samples; the RVP results ranged from 4.2 to 11.3 psig with an average value of 8.5 psig. DOT 111 railcars have a 240 psig minimum bursting pressure limit and have pressure relief devices set at 35 psig. Thus by Reid vapor pressure measurements alone Bakken crude oil should not present any real hazard during shipment.

There is an interesting article in Advances in Petroleum Exploration and Development that discusses the problems with RVP testing of crude oil and the analysis of the hazards associated with crude oil volatility. The authors recommend that more complex testing should be done using a device made by Grabner Instruments using test method ASTM D6336. This method would probably produce data that could provide a reliable safety standard for crude oil volatility.

Moving Forward

This is just one of the bills being introduced this session that address the safety issues associated with rail shipments of Bakken crude oil. This bill would certainly be opposed by the oil industry and would thus see significant opposition in the Republican controls congress. While Garamendi is a senior Democrat on the House Transportation and Infrastructure Committee, he is not on the Railroads, Pipelines and Hazardous Material Subcommittee which would be expected to handle this bill first. It is unlikely that he has the influence to get Chairman Shuster (R,PA) to begin consideration of this controversial and ineffective bill.

No comments:

/* Use this with templates/template-twocol.html */