New US emergency order on rail transportation of crude oil will not affect shipments out of Bakken formation in North Dakota, says BNSF, the main railroad moving oil from region

Cindy Allen

BISMARCK, North Dakota , May 13, 2014 (Associated Press) – The main railroad moving crude oil out of the rich Bakken formation in North Dakota and Montana said a new federal emergency order on rail shipments will not affect shipments.

The U.S. Department of Transportation on Wednesday required railroads to inform state emergency management officials about the movement of large shipments of crude oil. The agency also asked companies shipping oil from the Bakken region to stop using older generation tank cars that have been involved in a spate of fiery derailments over the past year.

"We will comply with the new reporting requirements but do not anticipate they will impact our service," BNSF Railway Co. said in a statement. "We will continue moving the freight that our customers demand."

Public and political pressure to make oil trains safer began last summer when a runaway oil train carrying Bakken crude derailed and exploded in Lac-Megantic, Quebec, killing 47 people and incinerating much of the town. Other trains carrying Bakken crude have derailed and caught fire since then in Alabama, North Dakota, New Brunswick — and just last week — in Virginia.

Ron Ness, president of the North Dakota Petroleum Council, said Thursday that Bakken crude is being unfairly targeted by regulators.

"We're still in kind of amazement that they singled out Bakken crude," said Ness, whose group represents more than 500 companies in North Dakota and Montana. "We believe Bakken crude is a superior crude and can be shipped by rail just like ethanol, gasoline, diesel and other crude oils."

Ness said his group commissioned an independent study of Bakken crude characteristics, the results of which will be shared with federal regulators this month. He said more than 150 oil samples were taken from well sites and rail facilities throughout North Dakota and Montana, and sent to independent laboratories for analyses.

"We're hoping to share that information with the Department of Transportation and come up with a practical, scientific solution because right now the only solution appears to be a political solution," he said.

Federal officials have said that Bakken crude oil being shipped by rail may be more flammable than traditional forms of oil. The U.S. Department of Transportation issued a safety alert in January warning the public, emergency responders and shippers about the potential high volatility of crude from the Bakken oil patch. The sprawling oil shale reserve is fueling the surging industry in eastern Montana and western North Dakota, which is now the nation's second-largest oil producer behind Texas.

The Bakken encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba. About two-thirds of the acreage is in western North Dakota.

Mile-long trains pulling more than 100 cars laden with North Dakota crude began running in 2008 when the state first reached its shipping capacity with existing pipelines and infrastructure, said Justin Kringstad, director of the North Dakota Pipeline Authority. More than $2 billion has been spent on infrastructure and nearly two dozen railed-oil loading facilities have been built in North Dakota in recent years to move Bakken crude.

Kringstad said more than 70 percent of the more than 1 million barrels of oil produced daily from the Bakken region is being moved by rail, as producers increasingly have turn to trains to reach U.S. refineries where premium prices are fetched.

BNSF Railway, a unit of billionaire Warren Buffett's Berkshire Hathaway Inc., hauls about 75 percent of the oil that leaves the Bakken by train, Kringstad said.

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