On December 9, 2014, the North Dakota Industrial Commission (NDIC) ratified Commission Order 25427 requiring all Bakken Crude to be conditioned to a vapor pressure of 13.7 pounds per square (psi). Interestingly enough, this is 1 psi lower than the recognized national standard for oil stability of 14.7 psi (29 CFR 1910.106 & NFPA 30). The assumption is, the lowered vapor pressure is an acknowledgment that there is wide disagreement regarding the veracity of current vapor pressure testing methods when it comes to Bakken crude thereby “adjust[ing] for a margin of error.”
By comparison, gasoline distillation class D and class E products have vapor pressure requirements to not exceed 13.5 psi and 15 psi, respectively (ASTM 4814). Gasoline is distributed by distillation class, by region depending on altitude and temperature – typical winter blend in North Dakota is class D.
The rule lays out three options for which producers must comply:
- Install and operate treatment equipment at specified temperature and pressure requirements,
- Operate treatment equipment outside those requirements and demonstrate compliance with vapor pressure through sampling and testing, or
- Utilize an alternative method for which proficiency is demonstrated through sampling and testing and then must be approved through a request to NDIC.
Non-compliance comes with a fine of up to $12,500 per day effective April 1, 2015. And with two of the three options relying heavily on sampling and testing, the vapor pressure measurement debate is surely not going away. In anticipation of this somewhat expected ruling, Environmental Standards has been working with several producers and midstream operators to develop quality sampling and analysis programs utilizing novel approaches compliant with industry and regulatory standards.
With spot prices dropping below $50 per barrel in the Bakken region, this could mean closing up shop for smaller producers who are already dealing with lower prices compared to their Texas counterparts who only need to ship crude a short distance.
Producers will need to consider whether the capital costs of treatment equipment is worth continued operation. With gas flaring already elevated in the Bakken compared to other oil producing areas (as high as 30%; mainly due to lack of pipeline infrastructure), it has been suggested that compliance with this new rule may drive flaring even higher.
Shaun Gilday has been working with refineries, transload facilities, and producers since the US DOT first issued the emergency testing order, helping clients develop quality product testing programs. He has over 10 years of experience with environmental compliance, crude transportation, and quality assurance.