Smells Like Rotten Eggs – The Bakken Crude Hydrogen Sulfide Challenge

Recently there has been a spate of pipeline tariff filings to the Federal Energy Regulatory Commission concerning crude oil quality specifications for Bakken crude in North Dakota.  While the immediate disagreement between pipeline company Enbridge and shipper Plains Marketing appears to have been resolved, it has highlighted an issue which has not received much attention until now. Today we detail the concerns.

On May 8 2013 Enbridge Pipelines filed a tariff modification with the FERC for its North Dakota Pipeline system. Enbridge are required to file these tariffs because the North Dakota pipeline terminates at Clearbrook, MN and is therefore an interstate pipeline regulated by the FERC. That means every detail of the pipeline fees as well as regulations governing shippers and quality are subject to FERC approval.

This particular tariff modification was a request to alter the quality specifications of crude that could be carried on the Enbridge pipeline – effective immediately (the next day). The new specification limited the hydrogen sulfide (H2S) content of pipeline crude to 5 parts per million (ppm) or less. H2S is a colorless, flammable, extremely hazardous gas with a rotten egg smell. It occurs naturally in crude petroleum, natural gas, and other naturally occurring sources like hot springs. Enbridge had found dangerously high levels of H2S vapor phase content (gas) at their Berthold Station Terminal in North Dakota. Enbridge’s rapid implementation of a new quality rule was motivated by a concern about the safety of its workers – particularly those loading rail tank cars with crude oil at the Berthold Station. Crude oil from the Enbridge pipeline is delivered into the Berthold terminal for rail loading.

The Enbridge action to limit the H2S content of crude on its pipeline caused immediate pushback from one of the company’s longest established shippers – Plains Marketing LP that together with its affiliates transports over 20 Mb/d of oil on the Enbridge North Dakota pipeline to Clearbrook MN. [At Clearbrook the North Dakota system joins the Enbridge Lakehead pipeline system transporting crude to Chicago and on to Cushing, OK]. Plains lodged a protest about Enbridge’s new tariff filing the day after it was posted (May 9th, 2013). They objected to Enbridge having acted hastily to impose the H2S limit with one day’s notice under an emergency filing procedure and they objected to the tightness of the specification – arguing that it should be 10 ppm instead of 5 ppm. In their filing Plains argued that other North Dakota pipelines such as Bridger and Belle Fourche had instituted 10 ppm H2S limits in April 2013 with 30 days notice.

Enbridge fired off another filing to the FERC four days later on May 14, 2013 asking the Commission to reject Plain’s request for a higher H2S ppm limit and a 30 day notice period before implementing the new specification. Enbridge argued that the danger of exposing its workers to H2S was too great to wait before implementing the new specification. They cited a tighter 5 ppm H2S  limit imposed by Tesoro on its pipeline system in January 2013 that was accepted by shippers. Enbridge also suggested that since the Bridger and Belle Fourche competing pipes had imposed their H2S limits in April 2013, Enbridge was exposed to the risk of shippers who knew they possessed crude with H2S vapor issues switching to the Enbridge pipeline to get around the specifications imposed by its competitors.

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