New Rail Shipping Safety Regulations Making Waves in North Dakota

October 27, 2014 Audubon Companies

Due in large part to a number of major rail oil shipment accidents over the last two years – including the highly publicized derailment in Lac Megantic, Quebec last July that left 47 dead – North Dakota’s Industrial Commission has proposed new regulations that would mandate producers to strip certain liquids and gases from crude oil before it can be shipped by rail.

A report released earlier this year by the Pipeline and Hazardous Material Safety Administration indicated that product from the Bakken formation in North Dakota may actually be more flammable than oil from other regions, and as a result, transporting it carries a higher degree of risk.

The main objective behind new regulations that would require the removal of certain substances from this crude is to reduce its volatility and ultimately make it safer to ship.

Many oil companies operating throughout the region have been quick to dispel this notion, citing a separate report funded by the North Dakota Petroleum Council, which found that oil from Bakken is of no additional danger than crude from other regions.

In the midst of this debate, many of the largest producers have gone on record to say that current state shipping regulations are adequate and that adding costly stripping processes would likely result in a logistical nightmare that would further complicate matters and fail to produce any measurable safety benefits.

Oil shipments by rail in North Dakota have steadily increased over the past years due to a lack of pipeline capacity. The state is now second only to the state of Texas in terms of overall production and with output continuing to climb, finding viable transport methods will become increasingly important.

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