North Dakota drillers currently flare more than a third of the gas because development of pipelines and processing facilities to capture it hasn’t kept pace with oil drilling.
"If production curtailment is the chosen regulatory path, then wells will be shut in or not even drilled,” says Roger Kelley, director of regulatory affairs for Continental Resources (CLR), one of the biggest players in the state.
Another potential problem related to fracking has been discovered in North Dakota, where piles of garbage bags have been found in two places recently filled with “oil socks” used to capture silt found in the waste water from fracking, but which also contain radioactive waste.
Yesterday's U.S. government emergency order requiring tests of crude oil on trains prompts confusion as refiners and producers try to understand what the new requirements will mean to their operations and how broadly they will apply to shipments.
"What do you want us to test for?” says Alon USA Energy's (ALJ) director of supply, trading and business development. "I’m not really sure what this means or what they expect from us."
Tesoro’s (TSO) VP of development, supply and logistics says he isn’t sure what new procedures were being mandated since the company already tests crude shipments.
Continental (CLR), the biggest producer of Bakken crude, praises the government’s effort to improve crude-by-rail safety.
Companies moving crude oil by rail must test the volatility of fuel out of North Dakota's Bakken oilfields to ensure the proper classification of crude oil before it is transported, the Department of Transportation announces.
The move is meant to step up oversight after several recent fiery derailments of oil moved by rail out of the Bakken; some data contends that Bakken crude is more combustible than oil from other areas.
Nearly 1M bbl/day are being produced in North Dakota but with pipeline capacity unable to keep up with growth, railroads are the prime method of transporting the crude to refineries; the volatility of the crude, however, raises concerns that the cargo moving through the U.S. is more dangerous than previously believed.
Tanker cars full of oil pass through several major U.S. cities, and a repeat of what happened in last July's fatal derailment in Quebec in a densely populated area is a huge safety concern.
Recent accidents involving crude oil being shipped from North Dakota are raising eyebrows on Wall Street and have analysts looking at companies that could be exposed to new rules governing oil shipments from the region.
Mizuho analyst John Malone says costs related to "stricter transport standards could squeeze margins further" on oil out of the Bakken shale, citing several stocks with the potential to suffer as a result, including Hess (HES), Marathon Oil (MRO), Continental Resources (CLR), Oasis Petroleum (OAS), EOG Resources (EOG), Whiting Petroleum (WLL), Kodiak Oil & Gas (KOG) and Triangle Petroleum (TPLM).
Some companies that produce oil in the Bakken region are seeing weakness amid lower crude prices and concerns about safety issues of transporting crude oil following the recent rail accident in North Dakota.
The Pipeline and Hazardous Materials Safety Administration today issued a safety alert noting the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.
Experts have said that unusually large amounts of naturally occurring and highly flammable petroleum products such as propane and ethane may be coming out of the ground with the Bakken crude.