The increase in the number of accidents involving the transportation of oil by rail has increased the scrutiny on shippers of Bakken crude oil. In response, the United States Department of Transportation has proposed new rules to govern the shipment of oil by rail and has also issued emergency orders on this topic. It appears that states are beginning to take an active role in the regulation of Bakken crude oil as well.
On December 9th, the North Dakota Industrial Commission (Commission) announced new regulations governing the shipment of Bakken crude oil in the state. Under the new standards, companies must separate light hydrocarbons from Bakken crude oil produced in the state and take measures to ensure that the hydrocarbons are not mixed into the oil before it is shipped. The new standards will take effect on April 1, 2015.
With the adoption of these new rules, North Dakota’s requirements for the shipment of Bakken crude oil are stricter than national standards. Whereas North Dakota now requires Bakken crude oil to have a vapor pressure of 13.7 pounds per square inch (psi) or lower, the national standards only require a psi of 14.7 or lower. To ensure compliance, North Dakota’s Department of Mineral Resources will conduct field inspections, and parties found violating the order could receive fines as high as $12,500 for each day they violate the new rules. The Commission has stated, however, that companies may request a hearing with the Commission if they wish to utilize an alternative stabilization process.