| WASHINGTON, June 30
WASHINGTON, June 30 A handful of small
refineries in North Dakota could remove dangerous gas from oil
train cargoes and make shipments from the state's productive
Bakken shale area safer on the tracks, according to a company
which has pitched the idea to regulators.
The proposal from Quantum Energy Inc would strip
propane and other volatile gas from North Dakota crude and send
much of the remaining fuel to distant refineries.
Williston, North Dakota-based Quantum hopes to build five
"micro refineries" near railheads already handling Bakken crude
to strip about 100,000 barrels a day of fuel from that stream.
Some of the resultant gas could add to household fuel
supplies in the upper Midwest while making Bakken-origin rail
cargoes safer, Quantum's executive vice president Russell Smith
"Our plan solves a couple of important problems," said
Smith, who earlier this month pitched the idea in meetings with
White House officials and Transportation Department regulators
mulling oil train safety.
Besides light fuels, Smith said, the Quantum facilities
would also pull a stream of diesel gasoline from Bakken sources
to help slake demand in the region. Executives hope to have
permits and financing to break ground on at least one of the
proposed refineries before year-end.
The company expects that each processing center would cost
about $500 million.
A spokesman for the U.S. Department of Transportation said
officials could not comment on their deliberations about oil
train safety or meetings with industry.
In the coming weeks, though, officials are expected to
outline measures to improve oil train safety such as demanding
tougher tank cars, slower speeds and diversions around urban
Several oil cargoes from North Dakota's Bakken have exploded
during rail accidents in the last year. Some officials say
toughened tank cars should be used to move such fuel.
Regulators have homed in on the vapor pressure of Bakken
fuel, one index of the explosion risk.
Industry-funded tests of Bakken fuel have returned vapor
pressure readings of 15 pounds per square inch on the
commonly-used Reid scale, while Quantum Energy believes it could
bring that reading below 6 psi, similar to fuels like ethanol
and heavy crude.
"The crude is much less volatile once you take these light
tops off," said Smith, referring to the gassy share of Bakken
Some oil industry officials, though, see little need to
reduce vapor pressure in oil train cargoes and think Quantum
might have misjudged demand for gas.
"There will be a market for propane, potentially in North
Dakota, but what about the other components they'll be
removing?" said Kari Cutting, vice president of the North Dakota
Pentane, butane and other light gases are not easily
marketable in North Dakota currently and may have to be shipped
to buyers such as far-off chemical plants in tank cars fit to
carry dangerous gas.
Smith said Quantum expects to find buyers that would welcome
the portion of Bakken fuel not marketed close to the source. The
Bakken field extends into Montana and Canada's Saskatchewan and
(Reporting by Patrick Rucker; Editing by Alden Bentley)