August: N. Dakota adding pipelines, but oil trains still up

North Dakota added 2,578 miles of crude oil and natural gas pipelines in 2013, a 15 percent increase, but most of the state's oil is still shipped to market on trains, state officials said Friday.

The newly built pipelines largely collect oil and gas from well fields, reducing the amount of local truck traffic and wasteful burning, or flaring, of gas at the wellhead, said Justin Kringstad, director of the North Dakota Pipeline Authority.

"We are connecting more wells to our gas system than were drilled," he said.

But gathering pipelines don't take oil to market, and haven't reduced the need for oil trains.

In June, 59 percent of North Dakota's oil was shipped to market by rail, or about 700,000 barrels per day, a slight increase over May, according to new data released Friday from the authority.

Later this year, Kringstad said, two new oil pipelines, with a total capacity of 160,000 barrels per day, will begin transporting oil to Wyoming and then to a major terminal in Cushing, Okla., via another pipeline.

Meanwhile, North Dakota reported a 5 percent surge in oil production in June to 1.09 million barrels per day, and officials expect similar gains in the months ahead. The latest surge comes just two months after North Dakota surpassed the symbolic milestone of 1 million barrels per day.

The June increase of 52,000 barrels per day equates to a need for more than four 110-car oil trains per week to carry it away. It's not known if all that additional crude left the state on trains. But in June, BNSF Railway and Canadian Pacific told Minnesota officials that about 50 Bakken oil trains were passing through the state each week, and most went through the Twin Cities.

Lynn Helms, director of the North Dakota Department of Mineral Resources, said in his monthly report Friday that the state's "crude oil take away capacity is expected to remain adequate as long as rail deliveries to coastal refineries keep growing."

At least 15 major accidents involving crude oil or ethanol trains have occurred in the United States and Canada since 2006, including the July 2013 Lac-Mégantic, Quebec, disaster that killed 47 people. On Monday, Minnesota Gov. Mark Dayton heard from emergency planners that small cities are not prepared for oil train explosions and fires. In July, the U.S. Transportation Department proposed rules to strengthen tank cars to reduce explosion risks, but the regulations are not yet in effect.

On a conference call with reporters Friday, Helms said the state Industrial Commission, which oversees the oil industry, will hold a public hearing in the near future to consider state requirements on oil companies to treat crude oil to make it less volatile.

Federal officials have said tests of North Dakota crude oil found it is somewhat more volatile than other light crudes. But North Dakota's oil industry says its testing doesn't show Bakken crude is more volatile.

Helms didn't elaborate on the possible new requirements, but said they could mean "significant additional operating costs" because one of the treatment steps involves heating crude.

David Shaffer • 612-673-7090 • @ShafferStrib