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ANALYSIS-U.S. scrutiny of oil train shipments spotlights flawed crude tests

* Emergency testing order lacks clarity, experts say

Current crude testing could produce flawed results

By Kristen Hays

NEW ORLEANS, March 3 (Reuters) - A U.S. emergency order to test oil shipped by rail highlights what many industry officials have long said is a flawed method for testing the volatility of types of oil that have been involved in several fiery train derailments in the last year.

U.S. regulators last week took the latest step in an effort to address public and political outcry over the risks of shipping potentially volatile oil on mile-long trains across the United States, issuing an immediate order that all such cargoes must be tested for a range of qualities.

The order did not specify the frequency or method for such tests, leading to complaints about how shippers could comply. Until now, it has been up to shippers themselves to vouch for their cargo, and to decide what testing, if any, was necessary.

Some industry players say test data could be questionable, especially if they rely on a decades-old standard that many say fails to account for a large share of the highly volatile gases and natural gas liquids (NGLs) that emerge from shale oil fields like North Dakota's Bakken.

Testing experts at a Crude Oil Quality Association meeting in New Orleans last week said they were concerned that the order did not spell out how testing would be conducted, and in particular whether the decades-old Reid Vapor Pressure (RVP) test, which has long been viewed as flawed, would be updated.

Harry Giles, former manager of crude oil quality programs for the U.S. Department of Energy's Strategic Petroleum Reserve and COQA's former executive director, said current testing methods may fail to detect all the elements the order said they should.

Those include the percentage of flammable gases in the crude, its flash point, or the temperature at which its compounds can give off enough vapor to ignite in air, the vapor pressure at 50 degrees Celsius (122 degrees Fahrenheit) and content of hydrogen sulfide, a highly toxic gas.

"I have reservations about the sampling and the analysis methods that are likely to be used to achieve that," he said.

The presence of light-end gases such as propane, butane, or hexane, some of which remain dissolved in Bakken crude but can "flash off" as vapor under certain conditions, can significantly raise pressure ratings, and potential volatility, of rail cargoes, experts say.

It is unclear what impact such tests could have, regardless of the results. Existing regulations do not use vapor pressure measurements to determine how crude oil is shipped.

Last week's order already bars shippers from using the least-dangerous level of classification for oil cargoes, leaving little leeway for further measures based on what the tests uncover.

A month ago regulators fined prominent Bakken producers Hess Corp, Marathon Oil Corp and Whiting Petroleum Corp for wrongly classifying crude shipments from North Dakota.

METHODS

A string of explosive derailments has put a sharp light on the safety of the rising oil-train shipments emerging from the Bakken oil fields, prompting regulators to investigate a number of possible factors, including use of older, less fortified tank cars, the labels that shippers use and the oil itself.

Since last summer's Lac-Megantic, Quebec, disaster, in which a runaway oil train exploded in the town's center, killing 47 people, U.S. regulators have been checking North Dakota oil shipments to determine whether shippers have correctly labeled their cargoes.

Crude oil is not usually considered a highly flammable material. But light oil like that produced in the Bakken field, more than two-thirds of which is transported by rail, contains the combustible light ends that can catch fire or explode if sparks fly in a crash.

Data from pipeline operator Capline shows that Bakken crude has registered a Reid Vapor Pressure of more than 9 lbs per square inch (psi), versus readings nearer 5 psi for many popular imported crudes. A newer reading this year showed one sample at below 6 psi, highlighting the wide variability of Bakken crude.

Testing oil samples to determine their vapor pressure is one of the main tools that safety regulators and the energy industry can use to determine the volume of such light-ends inherent in the oil, and therefore how combustible it may be.

Giles, now a managing principal for liquid petroleum transport company PetroStorTech LLC, said that in order to get an accurate reading and preserve light ends, crude samples need to be put in bottles that are chilled to zero to 1 degree Celsius (32 to 34 Fahrenheit).

However, he said samples are commonly gathered in unchilled plastic two-liter bottles, and light ends can vaporize and flash off before samples even get to a laboratory for testing.

Louis Ory of Intertek, one of the world's leading quality test groups, said improper sample gathering leads to compromised data.

"I've seen crude samples analyzed in Dasani bottles. Things like that will surely affect the quality of the data coming out of a laboratory," he said at the COQA gathering.

FLOATING PISTONS

A growing number of firms recommend adopting alternative testing protocols for light crudes and use of a specialized container known as a floating piston cylinder designed to preserve pressurized liquid and gas samples at chilled temperatures for testing.

However, Giles said they can cost $2,700 each, and may have to be ordered. "You don't go to the supermarket and buy a case of floating piston cylinders," he said.

Transport Canada, which regulates fuel shipments, hopes to soon endorse a device for proving crude oil pressure that will be "an efficient and scientific method of determining the volatility of products, such as those shipped by rail," a spokeswoman said.

SHARP LIGHT

It is unclear how many producers in the Bakken region use the newer methods, such as the cylinders, but both regulators and some refiners say that tests of any sort have been infrequent and inadequate.

For refiners, light ends have been more of an operational challenge than a safety risk, as they often have to be burned off or split out from crude before refining. Valero Energy Corp and Delek U.S. Holdings have added "pre-flash" units to some plants to handle those light ends.

Some refiners discover gassy cargoes after they are tested upon arrival, according to a presentation last summer by Gary Weimar of Irving Oil, a private Canadian refiner and a major buyer of Bakken crude.

Tank cars arrive from suppliers whose "source sampling program is almost non-existent," he wrote in the June presentation, days before the Lac-Megantic tragedy. That train had been destined for Irving's New Brunswick refinery.

Weimar declined further comment.

While flammable gases like propane must travel in special pressurized vessels due to their volatility, cargoes shipped as crude oil may travel in standard tank cars regardless of their pressure reading.

In the meantime, testers and their customers are calling for more clarity on how, when and what to test.

"We'll have to wait and see," said Kesavalu Bagawandoss, shale oil and gas corporate technical director for Intertek. "The emergency process is different from actual regulations."

(Reporting by Kristen Hays in New Orleans; Additional reporting by Patrick Rucker in Washington and Joshua Schneyer in New York; Editing by Jonathan Leff, Richard Chang, Lisa Shumaker and Paul Simao)