U.S. Transportation Dept. Says Energy Companies Not Sharing Test Data on Bakken Oil

Government Is Seeking Data on the Crude After a Series of Railroad Accidents in Which Oil Exploded

Wall Street Journal
2 May 2014

By Russell Gold

Most energy companies operating in North Dakota's Bakken Shale haven't provided safety regulators with the requested testing data on crude oil they ship by rail across the country, the U.S. Transportation Department said Friday.

The department has been seeking the information since January as it investigates the severity of fires and explosions in recent oil-train derailments, including one Wednesday in Lynchburg, Va., which sent flames 100 feet in the air and forced the evacuation of a large part of the downtown.

Only three companies have voluntarily shared data on the physical characteristics of crude, including its volatility and flammability, from the booming Bakken oil field, the department said. At least 40 companies are pumping oil there, and a dozen more operate rail-loading facilities.

The three companies that turned over data were Exxon Mobil Corp. , Continental Resources Inc. and Savage Services Corp., the government said. It didn't disclose the test results.

In a statement, the agency suggested it might take steps to compel companies to submit data. "All options remain on the table as we do everything we can to ensure the safe transportation of crude oil," it said.

The federal government and the oil industry have been sparring about the nature of Bakken crude, which regulators suspect is more combustible than crude pumped in other areas, and whether existing tanker cars are strong enough to safely carry it.

Late last month, the government sent a letter to all crude producers in the region asking for data on the "variability and flammability of Bakken crude oil."

In January, the department said the American Petroleum Institute, which represents oil companies, had agreed to share testing data; API said it didn't have the information itself but had encouraged companies to turn over their data.

API spokesman Eric Wohlschlegel said Friday the testing samples that have been turned over to the government "have illustrated there is no comparable difference between Bakken and other crudes."

Shipments of crude oil by rail have soared in the past few years as companies in North Dakota and Texas use tank cars to move oil to coastal refineries. At first seen as a temporary replacement for pipelines, crude by rail isn't increasingly viewed by the energy industry as a permanent part of its logistics chain.

This shift has led to increased regulatory concerns about whether the tank cars are durable enough in crashes. Last summer, a train full of Bakken crude derailed in Lac-M├ęgantic, Quebec, killing 47 people. Subsequent crashes in Alabama and North Dakota produced enormous fireballs, prompting even some in the oil industry to wonder why the crude was so volatile.

Canadian investigators said the crude that exploded in Quebec was as volatile as gasoline. The Wall Street Journal reported earlier this year that Bakken crude has several times the amount of combustible gases as oil from elsewhere.

The federal government is expected to release results of its own testing soon. And API, the industry group, said it was working with the North Dakota Petroleum Council on a comprehensive analysis of Bakken crude.

Write to Russell Gold at russell.gold@wsj.com