Lynchburg, VA Train Derailment Sparks Increased Scrutiny of Bakken Crude Oil

May 7, 2014 Kirk Eggleston

In late April of 2014, a train carrying Bakken crude derailed and burst into flames in Lynchburg, VA. No one was injured, but the incident has once again raised safety concerns about the transportation of crude by rail.

Currently, the U.S. Department of Transportation (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) is conducting tests of Bakken crude. In February of 2014, PHMSA announced it would pursue fines against Hess, Marthon Oil, and Whiting for failing to properly classify their oil. PHMSA requires the use of nine hazardous materials classifications.

In a May 2014 Wall Street Journal Report, the publication cited the DOT's claim that most energy companies operating in the Bakken haven't provided the requested testing data on crude they ship by rail. Exxon Mobil Corp., Continental Resource and Savage Services Corp. have voluntarily provided the data. A statement released by the U.S. DOT suggested it may take steps to force companies to submit data.

Is Bakken Crude More Flammable?

Bakken oil is produced at a high quality that makes it easier to refine into commercial products and makes it easier to ignite. Light oil production growth in the Bakken isn’t something the industry has never handled before, but the Bakken boom is bigger than anyone expected. As a result of lack of pipelines and additional infrastructure, nearly 70% of all Bakken crude is transported by rail.

Read more: Is Bakken Oil More Flammable?

History of Bakken Crude Oil Train Derailments and Explosions

The incident in Lynchburg, VA is the most recent in a chain of train derailments and explosions connected to Bakken crude. In July 2013, a train derailed and exploded in LacMegantic, Quebec, killing 47 people. The most recent incident, prior to the Lynchburg, VA, incident, occurred when two BNSF operated trains carrying Bakken crude collided and derailed near Casselton, ND, in late December 2013.

In early April of 2014, a Senate Appropriations Subcommittee hearing was held to examine the level of federal resources that should be allotted for railway safety. Multiple U.S. Senators appealed to the committee for more railway safety funding, including Senators John Hoeven (R) and Heidi Heitkamp (D) of North Dakota.

Whiting Petroleum Has Record Bakken Production in First Quarter

May 2, 2014 Kirk Eggleston

Whiting Petroleum had record breaking Bakken production in the first quarter of 2014 of 73,325 boe/d. That's up 27% over the first quarter of 2013. On April 1, 2014, the company claimed to have achieved its' best well result to date in its' Cassandra field in Williams County.

“Whiting’s CEO James Volker said, ““Our North Dakota, Colorado and Texas teams overcame one of the most severe winters on record so that we met all of our guidance numbers in the first quarter. We [] achieved our best well result to date at our Cassandra field with the completion of the Kaldahl 11-3H flowing 1,930 BOE/d on April 1, 2014 using a cemented liner.”

Whiting's Bakken First Quarter Operations Highlights

In the Missouri Breaks Field (Richland and McKenzie counties, North Dakota), Whiting completed four wells at the end of March and the beginning of April in this area, with an average of 1,206 boe/d. The company used its new coilded tubing fracture stimulation method on one of the wells, and achieved a flow rate of 1,607 boe/d, which was 73% higher than the initial well in the unit.

In the Cassandra Field (Williams County, North Dakota), The Kaldahl 11-3H was completed in the Middle Bakken on April 1, 2014 flowing 1,930 boe/d. That's 104% higher than the 10 prior wells completed in the Middle Bakken formation.

Whiting Petroleum has operations in the Williston Basin covering Mountrail, Stark and Billings counties in North Dakota, and Wibaux County, Montana.

Continental Resources: Bakken Hits 1-Billion Barrel Mark

April 30, 2014 Kirk Eggleston

Continental 2014 Production — Continental 2013 Production

Citing IHS data, Continental Resources revealed the Bakken field of North Dakota and Montana reached the milestone of 1 billion bbls of cumulative light, sweet crude oil produced during first quarter of 2014.

Two-thirds of the total was produced in the last three years according to Continental.

“This milestone validates the immense potential of the Bakken field and development is just beginning,” said Jack Stark, Senior Vice President of Exploration for Continental. “Two-thirds of this oil was produced in the last three years. This is something our country can celebrate as the oil and natural gas industry continues to create jobs, grow our economy and secure America’s energy future.”

Continental is the largest producer, driller and leaseholder in the Bakken field. In 2013, the company's proved reserves stretched to more than 1 Billion boe, with an estimated value of more than $20 billion.

The Bakken is anticipated to continue achieving milestones. In 2014, oil production is expected to reach the 1 million b/d mark, and grow markedly beyond that figure over the next 5 – 6 years.

According to the oil and gas research and consulting firm Wood Mackenzie, the Bakken and Three Forks plays hold close to $118 billion in value. Despite infrastructure concerns, estimates indicate operators will recover more than 20 billion bbls of oil reserves throughout the life of the play.

New Bakken Man Camp Coming Soon

April 25, 2014 Kirk Eggleston

Dining Hall at a Target Logistics Property

Target Logistics, a Boston-based builder and operator of housing projects primarily for the energy industry, secured a 30-million contract to provide lodging for Bakken Shale oilfield workers over the next three years.

According to the company, it will provide workforce housing to one of the largest independent (non-integrated) crude oil and natural gas companies in the United States. Target Logistics did not reveal their client in a company statement announcing the new contract in early April 2014.

“Fueled by double-digit, oil-weighted production growth, this exploration and production pioneer turned to us for a well-organized, upgraded housing solution,” says Target Logistics President and Chief Operating Officer Brad Archer. ”

Unlike other housing in the Bakken Shale region, the activity of residents is monitored. The company has strict rules against alcohol on the premises and guests of workers are not allowed to stay overnight, including worker's spouses.

The way it works is oil companies pay Target Logistics to house and monitor their workers, and the oil company then offers housing accommodations to workers as part of their compensation. This is important to companies seeking to retain employees in a region where there are limited housing options, and other companies vying for workers with attractive housing packages.

Recently, a study done by ApartmentGuide pushed Williston, ND to the top spot for the highest rent area in the U.S. According to the publication, a 700-square-foot, one-bedroom, one-bath apartment in Williston, North Dakota can cost more than $2000 per month.

Dormitory-style housing, such as that offered by Target Logistics to employees of certain companies, will not be an option for everyone. In which case, there are other options to consider. Check out the Lodging page on BakkenShale.com to see recent postings for Bakken housing, hotels and man camps.

North Dakota To Implement New Regulations Combating the Disposal of Radioactive Waste

April 23, 2014 Kirk Eggleston

Beginning on June 1st, 2014, North Dakota will begin enforcing new regulations to combat the illegal disposal of radioactive waste. Leak proof containers will now be required at injection well-sites to store "oil socks"*, which are used to filter silt from waste water that is yielded from hydraulic fracking. The oil socks accumulate radium from the soil, rock and water present in the waste water.

According to the Environmental Protection Agency (EPA), the average concentration of radium in wastewater sludge from oil and gas production is about 75 picocuries per gram. Currently, there aren't any designated dumps in the state that accept radioactive waste below naturally occurring levels in the soil - around 5 picocuries. Montana has some designated facilities that accommodate radioactive waste under 30 picocuries per gram. As a result, multiple incidences have occurred where the oil socks have been disposed of improperly. Most recently, used oil socks have been found in Noonan, ND, at a deserted gas station, and on flatbed trailers in a landfill in Watford City, ND.

According to a Wall Street Journal report, state officials connected the Watford City, ND, incident to Riverton, WY-based RP Services, LLC. One of the company's clients, Continental Resources, cut ties with them after that discovery was made. Continental Resources is one of the largest operators in the Bakken Shale.

Fines for illegal dumping of radioactive waste can reach as high as $10,000 per incident in North Dakota. That's in addition to a $1,000 fine for standard illegal dumping.

Oil sock - absorbent tube-like apparatus that filters silt in the process of pumping waste water down injection wells