Bakken oil boom echoes in Clark County

Production surge already felt in N.W. likely to resonate 'for a long time'

By Eric Florip, Columbian Transportation & Environment Reporter

Published:

 

Day 2

Getting a piece of the Bakken pie: Port of Vancouver, other Clark County businesses, individuals seek to cash in on N.D. oil boom

Proposed Vancouver Terminal

What: A proposed oil transfer terminal at the Port of Vancouver

Who: Tesoro Corp. and Savage Companies

How much: The facility would cost $150 million to $190 million

How big: The terminal could handle 360,000 barrels of crude per day on average

Benefit: The companies say the facility would create 120 permanent jobs and $5.2 million in annual tax revenue

Where it stands: The project is being reviewed by the state Energy Facility Site Evaluation Council

End game: Its fate will ultimately be decided by Gov. Jay Inslee

Crude Connection - From North Dakota to the Northwest

Bakken characteristics, safety issues

o Bakken shale oil contains up to 30% light hydrocarbons, making it highly flammable, easily ignited at normal temperatures.

o Vapors may form explosive mixtures with air.

o Vapors may spread along ground, collect in confined areas.

o Potential for fire and explosion single largest risk to public health.

o For large spills, consider initial downwind evacuation of at least 1,000 feet.

o If tank, rail car or tank truck involved in fire, isolate area for half-mile in all directions; consider initial evacuation for half-mile in all directions.

o For incidents involving multiple rail cars, large tanks evacuation distance expands accordingly

SOURCE: Region 10 Regional Response Team/Northwest Area Committee Emerging Risks Task Force

Coming Monday

The boom is already echoing in the Northwest, but how much prosperity will trickle to Clark County?

Getting a piece of the Bakken pie: Port of Vancouver, other Clark County businesses, individuals seek to cash in on N.D. oil boom

What: A proposed oil transfer terminal at the Port of Vancouver

Who: Tesoro Corp. and Savage Companies


How much:
The facility would cost $150 million to $190 million

How big: The terminal could handle 360,000 barrels of crude per day on average

Benefit: The companies say the facility would create 120 permanent jobs and $5.2 million in annual tax revenue

Where it stands: The project is being reviewed by the state Energy Facility Site Evaluation Council


End game:
Its fate will ultimately be decided by Gov. Jay Inslee

WATFORD CITY, N.D. — On a rare day off, Chris Piche reached into the bed of his pickup and pulled out a small plastic container holding his livelihood.

The former Battle Ground resident opened it and poured its contents into an empty water bottle. The thin, dark orange-tinted liquid, about the consistency of water, flowed in as yellow bubbles formed on top.

He held it up under the bright sunlight for a better view.

“That’s crude oil,” Piche said.

More specifically, that’s Bakken crude oil — the reason Piche and thousands of others have moved to western North Dakota in recent years. The reason for an unprecedented economic boom that has brought with it unprecedented attention and scrutiny amid environmental and safety questions. And the reason North Dakota and Vancouver are now linked as never before.

Piche owns Mathews Transport, a trucking company that hauls oil and gravel in the region. He moved here two years ago and started his business after working for Clark County contractor 3 Kings Environmental, following the blueprint of two former colleagues who had done the same. He’s a small cog in the Bakken machine that now produces about 1 million barrels of crude per day.

Extracting crude from underground shale formations has created an economic engine that could yield riches for decades. But the immediate challenge is moving all of that oil to insatiable energy markets far beyond these rolling hills. Without nearly enough pipeline capacity to carry the load, most of it will travel by rail.

It’s here that Bakken oil begins its journey to refineries, and ultimately to gas pumps and store shelves as other products. That journey takes much of the crude right through Vancouver along BNSF Railway’s main line. On average, two loaded trains per day roll through town.

A proposed oil transfer facility at the Port of Vancouver, now under review by a state regulatory authority, could more than double that number. Even more oil will pass through if other proposed terminals are built in Washington and Oregon.

But while North Dakota and the Northwest are connected by oil trains, there’s a stark disconnect in the way Bakken crude is viewed in the two regions.

As North Dakota enjoys a historic windfall from the crude, critics say Vancouver will see relatively little gain but all of the risk that comes with its transport. A developer looking to create Vancouver’s first waterfront high-rise urban neighborhood says the proposed oil terminal is incompatible with his project, less than two miles away. In June, a majority of Vancouver’s city council voted to oppose the terminal and any project that increases the amount of Bakken crude transported through Clark County until there’s a “proven track record that demonstrates the safety of the methodology.”

An unsettling series of oil tanker accidents in North America, including one in Canada that cost dozens of lives last year, has unnerved some who live closest to the tracks and created political pressure nationally for improved safety measures. Oil stabilization and tanker car upgrades may provide some answers. But change hasn’t come fast enough to allay opponents’ fears.

Yet like it or not, oil trains may be here to stay. With or without the proposed terminal in Vancouver, market forces are poised to continue sending Bakken crude westward far into the future, industry players say. Emergency responders, meanwhile, are still learning when and where those trains pass from railroads sometimes reluctant to share information. Communities along the line hope to minimize the risks to their environment and safety.

“This thing’s going to be here for a long time, and I think a lot of people don’t realize that,” said Russell Atkins, production manager for Continental Resources’ Bakken operations. “Everybody’s used to that five- to six-year boom, and then we’re done.”

“This is different.”

From drill to tank car

It’s difficult to overstate the scope of oil extraction from the Bakken and Three Forks shale formations, a vast area covering roughly the western half of North Dakota, plus parts of South Dakota, Montana and Canada. There’s no escaping the sights and sounds of a pervasive oil culture in this region.

Locals in North Dakota say the best view of the oil fields comes at night. That’s when gas flares at thousands of well sites offer an expanse of unmistakable beacons illuminating the dark landscape.

Oil was discovered in the Bakken area as early as the 1950s. Attempts at production found varying levels of success, some booms and busts, and many failures. It wasn’t until the last decade that the advance of newer technologies, and extraction methods known as horizontal drilling and hydraulic fracturing, or fracking, allowed production to take off.

“Frack jobs,” which blast water, sand and chemicals into the ground to release oil and gas, are now standard operating procedure at drill sites. The technique is controversial in its own right, and has prompted worries about groundwater contamination and other environmental damage.

It’s about 60 days from the time a drilling rig first pierces the earth to the time a well starts pumping on that site, Atkins said. Companies are drilling about 2,000 wells per year.

North Dakota is now the nation’s second-biggest oil producer behind only Texas. Some 190 drilling rigs are active at any one time, constantly preparing the way for new oil wells. Nearly 11,000 existing wells pull crude out of the ground now, their hammer-shaped pumps bobbing around the clock. Many are located right next to major roads, houses and farms. State rules dictate that an oil well must be located at least 500 feet from the nearest home. On a gravel road outside Williston, a mother and daughter figure the well next door is 501 feet away.

May marked the second consecutive month that North Dakota produced an average of more than 1 million barrels of oil per day, almost all of it from the Bakken region, according to the state Department of Mineral Resources. State officials believe that number could climb to as high as 1.6 million in the coming years.

“That kind of scale, you’ve got to go to the North Slope (Alaska), you’ve got to go to Saudi Arabia, you’ve got to go offshore for those kinds of volumes,” Atkins said last month during a drive through North Dakota’s oil fields.

Some wells are connected directly to pipelines. Others require the services of people like Piche, the Mathews Transport owner.

For rail-bound crude, outfits like Mathews Transport carry oil from well sites to train-loading terminals. Piche routinely logs 12- to 16-hour days during a six-day workweek, he said. He can transport four loads in a day, depending on distance.

Piche and other drivers don’t blindly load crude into their rigs before hitting the road. They’re responsible for the oil they carry, and often test it for dirt or water content to make sure the next stop gets the product they’re expecting.

“Every load belongs to me until I get it to where I’m going,” Piche said at his yard outside Watford City this month.

Oil trucks like the blue Kenworth parked at Piche’s home base carry 200 to 240 barrels of crude. That’s tens of thousands of dollars sitting in the tank trailer, he said, and it’s worth nothing if it’s of inferior quality.

“It pays to check,” Piche said.

Many oil trucks end up in nearby Trenton, N.D., the site of a rail terminal operated by Savage Companies — the Utah-based company that, with Tesoro Corp., wants to build the oil transfer facility at the Port of Vancouver.

Savage’s 273-acre Trenton terminal can move up 175,000 barrels of Bakken crude per day. That’s far less than the rail-to-river operation proposed in Vancouver, which would handle an average of 360,000 barrels per day, according to the companies. The Vancouver terminal would be the largest such operation in the Northwest.

The Trenton facility can load a full oil train — up to 118 tanker cars, each holding 650 to 700 barrels of oil — in about 12 hours, said operations director Gary Anglesey. Like the oil fields themselves, the terminal operates 24/7. It sits along the BNSF main line that connects directly to Vancouver.

Savage’s Trenton terminal opened in 2012. Like others, Savage saw an opportunity to capitalize on an industry it believes is here to stay.

“There’s a market here,” Anglesey said at the facility. “There’s a product that needed to be taken to market.”

Savage’s Trenton facility sends about one loaded oil train per day on its way. A planned expansion would make it two trains daily.

On a recent afternoon, an oil train sat on the facility’s circular track waiting to go westward. Anglesey wouldn’t say whether its route would take it to Vancouver.

Danger: ‘It’s the oil’

o Bakken shale oil contains up to 30% light hydrocarbons, making it highly flammable, easily ignited at normal temperatures.

o Vapors may form explosive mixtures with air.

o Vapors may spread along ground, collect in confined areas.

o Potential for fire and explosion single largest risk to public health.

o For large spills, consider initial downwind evacuation of at least 1,000 feet.

o If tank, rail car or tank truck involved in fire, isolate area for half-mile in all directions; consider initial evacuation for half-mile in all directions.

o For incidents involving multiple rail cars, large tanks evacuation distance expands accordingly

SOURCE: Region 10 Regional Response Team/Northwest Area Committee Emerging Risks Task Force

As trains carry crude all over the country, questions about its safety continue to swirl. Worries have only amplified in the wake of at least eight derailments since last year.

The worst of those leveled part of a town in Quebec, killing 47 people when a runaway train carrying Bakken crude exploded in July 2013.

The incident changed the conversation about the oil, including locally when a Port of Vancouver commissioner and others questioned earlier assurances of safety. More derailments and explosions followed.

Multiple reports and analyses have suggested Bakken crude is more dangerous than other oil because of the amount of volatile gases it contains and other characteristics. Many believe it could be made safer by “stabilization,” a process that strips some of those gases from the oil before it’s transported — something most North Dakota producers don’t currently do. The stabilization question hasn’t figured prominently into the oil debate in Clark County.

Here, oil industry officials, leaders and even regulators are quick to defend their product and reject calls for stabilization.

“It’s not any different than any other crude oil,” Atkins said. “But there’s just more of it, so it gets a lot more attention.”

Atkins and others in the industry have noted that recent incidents involving Bakken crude have coincided with the sharp rise in production volume, and the amount being transported by rail. Indeed, tank cars themselves have come under intense scrutiny as older models are phased out.

The U.S. Department of Transportation this year proposed a two-year phaseout of older cars amid pressure from federal lawmakers. In February, BNSF announced a voluntary plan to add 5,000 “state-of-the-art” tank cars to its fleet for carrying crude oil.

As for the oil itself, North Dakota Agriculture Commissioner Doug Goehring said Bakken crude is actually less volatile than other crude, citing an industry-funded study released earlier this month. The report by Turner, Mason & Company found that many of its qualities were comparable to other crude oil sources. The $400,000 analysis was commissioned by the North Dakota Petroleum Council, an industry lobbying group.

Goehring is one of three members, along with the state’s governor and attorney general, of the North Dakota Industrial Commission. That’s the body that oversees oil and gas and other industries in the state.

Goehring attributed the controversy surrounding Bakken oil to “people that feel justified in stopping some form of activity (with a) belief that it has a negative impact on society, or that there’s so many associated dangers with it.”

But the claim that Bakken oil is as safe or safer than other crude directly contradicts numerous other reports and studies on the subject.

An analysis released last month by the federal Pipeline and Hazardous Materials Safety Administration found that Bakken crude “has a higher gas content, higher vapor pressure, lower flash point and boiling point and thus a higher degree of volatility than most other crudes in the U.S., which correlates to increased ignitability and flammability.”

The report added: “Given Bakken crude oil’s volatility, there is an increased risk of a significant incident involving this material due to the significant volume that is transported, the routes and the extremely long distances it is moving by rail.”

Even in North Dakota, not everyone sees the source of the state’s newfound prosperity as safe. Ron Schalow is among those who have called for Bakken crude to be treated before it’s transported.

“In my mind, it all boils down to what we’re sending out of North Dakota. So I think that’s our responsibility, my responsibility, my government’s responsibility,” said Schalow, an activist and writer who lives in Fargo.

“These are going all over the country. We’re sending them over state lines, and waving goodbye, and hoping for the best.”

Focusing on tanker cars and rail safety, Schalow said, ignores the underlying issue.

“They aren’t the problem. It’s the oil,” he said. “Somehow oil has stayed out of the spotlight even though it’s the oil that’s blowing up.”

Here to stay

Drilling in the Bakken, meanwhile, is moving full speed ahead.

The boom is already echoing in the Northwest, but how much prosperity will trickle to Clark County?

It could be another 15 years before Continental Resources finishes installing its thousands of wells in the region, Atkins said — and that’s just one company. Once operating, a well can pump for 20 years or more. Total recoverable oil reserves in the Bakken have been estimated as high as 36 billion barrels. (The Bakken reportedly produced its 1 billionth barrel of crude earlier this year.)

As local communities in North Dakota prepare for a prolonged surge of growth and activity, plenty in the Northwest are taking notice. Vancouver has become a key battleground in the national debate over fossil fuels and the safety of oil transport.

The Port of Vancouver, for its part, opened its own field office in Williston this year hoping to cultivate partnerships that go beyond oil. Curtis Shuck, the port’s senior sales director, is spending two weeks per month in the area.

But fierce opposition to the proposed oil terminal at home has raised questions about whether the port is out on the cutting edge, as Shuck says, or just out on a limb.