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West Virginia Derailment Raises Concerns About Volatility Of Bakken Oil

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West Virginia Derailment Raises Concerns About Volatility Of Bakken Oil

Energy

West Virginia Derailment Raises Concerns About Volatility Of Bakken Oil

West Virginia Derailment Raises Concerns About Volatility Of Bakken Oil

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NPR's Melissa Block speaks with Wall Street Journal reporter Russell Gold about the volatility of crude oil from the Bakken shale formation in North Dakota. That's the same oil that exploded when a train derailed in West Virginia two weeks ago.

MELISSA BLOCK, HOST:

Dangerously high levels of combustible gas - that's what tests show about the crude oil in the freight train that derailed in West Virginia late last month. Dozens of train cars burst into flame and exploded into huge fireballs. No one was killed, but 200 people from nearby towns were forced to flee their homes. The fire burned for more than three days. The train was carrying crude from North Dakota's Bakken oil fields and Russell Gold, who covers energy for The Wall Street Journal, has seen a lab report analyzing that oil. He joins me now - welcome to the program.

RUSSELL GOLD: Thanks for having me.

BLOCK: And Russell, what does that lab report show?

GOLD: Well, the lab report, which was a test of the crude oil in North Dakota, showed that it had a vapor pressure of about 13.9 pounds per square inch, which is very, very high for oil. Most oils or average oil might be somewhere around six pounds per square inch. That's actually above - a new state rule says you can't ship oil if it's above 13.7.

So when North Dakota adopted this rule right at the end of last year, there were a lot of people that said we're glad you're regulating this, but it's very high. Can't you make it lower? And what's really remarkable is that the oil in the train that derailed in West Virginia was even higher than that standard.

BLOCK: Now, you say it's a new state rule. But if I have this right, that state rule hasn't yet gone into effect. So the fact that this oil was above that limit was not violating the regulation.

GOLD: Oh, absolutely. No, this was not a violation of the regulations. But what it does show is really what the oil industry is going to struggle with going forward - that the oil they're bringing out of the Bakken shale in North Dakota is incredibly gassy. And there really is no infrastructure up there - not enough infrastructure - to take the gases out. And what they're doing is they're leaving them in with the oil and transporting them across the country.

There is a growing amount of crude - hundreds of tanker cars full every day - leaving North Dakota heading for coastal refineries. The train in West Virginia - if it followed the route most of these trains take - went through the Twin Cities, down through Chicago, Ohio. There are trains going through Philadelphia regularly. They go through Albany and are loaded onto barges and go right past New York City on the Hudson. And they head out West through Portland and Seattle.

BLOCK: What's involved in the process of trying to reduce excess gas from crude oil? And how expensive a process is that?

GOLD: Well, it's not very expensive at all - it's cents on the barrel. And it's really not very difficult to do this. And if you look at a place like Texas, quite regularly they'll use a combination of heat and pressure to separate out the gases at the well site. But in North Dakota, that does not happen as much. There's no infrastructure to do anything with the gas, so the oil producers prefer to keep the gas in the oil and just ship it to markets.

BLOCK: How atypical would it be for a train like this one in West Virginia to - not just derail and spill - but to burst into flame and explode?

GOLD: Well, that's really what's been puzzling us since these trains started to burst into flames starting in Quebec, when 47 people died in 2013. Oil is not supposed to burst into flame and explode - certainly not creating 10 and 20-story tall fireballs, but that's what we're seeing.

BLOCK: You do hear this argument from some pipeline supporters that transporting oil by rail or by truck is more dangerous than transporting it by pipeline.

GOLD: I don't think there's any question about that. It is more dangerous. Pipelines tend to be safer. It's just that starting about 2008 when the Bakken shale up in North Dakota began to be developed, it was developed without pipelines. And it was developed in an era when, frankly, building a pipeline has become increasingly difficult. So the oil industry - there really was no crude by rail. But they came upon this solution - well, we have oil in the middle of the country and started moving it on trains. It was - they created an entirely new industry. So crude by rail started out really as a workaround for the fact that there were no pipelines up in North Dakota - or not enough.

BLOCK: Russell Gold covers energy for The Wall Street Journal. He's also author of the book "The Boom" about the oil industry. Russell, thanks so much.

GOLD: Thank you.

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