North Dakota is the second largest oil-producingAmerican state, after Texas. Companies remove about one million barrels ofcrude, unprocessed, oil from the Bakken Formation every day. The formation-- an area filled with shale and other rocks -- covers parts of western NorthDakota and eastern Montana.
Much of the crude oil leaves the area by train. But several accidents haveraised concerns about the method of transportation and the oil itself.
Last July, a train pulling 72 tank cars wrecked in the Canadian town of LacMegantic. The wreck caused an explosion and fire that killed 47 people.
The crude oil in the tank cars came from the Bakken formation. Severalaccidents since then have raised concerns about the explosive nature ofBakken crude oil. The U.S. Department of Transportation recently orderedshippers to test Bakken oil to make sure it is correctly identified beforeshipping.
But several studies have found that Bakken oil is no more dangerous thanother U.S. oil. Jeff Hume is vice chairman of Continental Resources, an oilproduction company.
“From what we tested and what we have gotten, it fits the specifications thatFIMSA has today for the rail cars that we are shipping it in. So under today’srules, we are moving it in a proper container.”
Roughneck Brian Waldner is covered in mud and oil while wrestling pipe on a True Company oil drilling rig outside Watford, North Dakota, October 20, 2012. Thousands of people have flooded into North Dakota to work in state's oil drilling boom. REUTERS/Jim |
About 70 percent of North Dakota and Montana crude oil is transported bytrain. Kari Cutting is vice president of the North Dakota Petroleum Council. She says shippers and producers are following government rules.
“All of those federal regulations that have been followed by Bakken, since westarted producing Bakken, as far as classifying it, putting it in rail cars, movingit safely, all of the things that the shippers and producers have to do before itgoes into that railcar, all of those rules were followed.”
The safety concerns about rail transportation have shown the need for moreoil pipelines. But North Dakota State University Economist Dean Bangsundsays oil pipelines are in short supply.
“A big issue in the state right now is the lack of pipeline capacity, and that thepipeline capacity to take the crude oil out of the state ends up with large pricediscounts. So the industry is now moving, to moving crude oil out of the stateby rail.”
The proposed Keystone XL Pipeline would connect pipes from Canada to thesouthern United States. Under the plan, 100,000 barrels of Bakken crude oilwould flow each day to a proposed link in the town of Baker, Montana.
Dean Bangsund talks about the proposal.
“Some of the crude that’s coming through our existing pipelines would bemoved into that, therefore displacing and adding existing capacity to some of the pipelines we already have in place.”
But concerns about the environmental risks of the Keystone XL pipeline havedelayed the plan. The price of shipping crude oil by rail usually costs morethan pipelines. But some companies still like that method because trains canreach more oil processing centers than existing pipelines.
I’m Jonathan Evans.
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