Oil firm 'working' with companies on pipeline to Phila.

Whiting Petroleum Corp. is "actively working with a couple of parties" on an oil pipeline that would connect the Bakken region in North Dakota with refineries in the Philadelphia area.

Whiting, the third-largest oil driller in the Bakken, is willing to work exclusively with a pipeline developer and would commit its crude to a line to Philadelphia, chief executive officer Jim Volker said at Hart Energy's DUG Bakken and Niobrara conference in Denver on Wednesday. The producer is currently moving crude to Philadelphia Energy Solutions L.L.C.'s refinery via a combination of pipeline, rail, and barge.

"What's the best market for Bakken crude?" Volker asked. "In my opinion, it's the Midwest and the Northeast, in particular the Philadelphia refining complex. Our contribution to that formula, getting oil there by pipeline, is to say publicly and privately to anybody who will listen, 'We'll commit our crude to that line.' "

Pipelines are less expensive and safer than railroads for delivering petroleum, and would address the growing anxiety about the high volume of oil trains moving through Philadelphia. But acquiring the land and building a pipeline would meet resistance.

The line would be the first directly linking the Bakken formation, the nation's third-largest oil-producing region that is not offshore, to a city along the Atlantic Seaboard. The shale area produces more than 1.1 million barrels of oil a day. A lack of pipeline capacity out of the formation has meant that 58 percent of oil leaves on trains, which are costlier, forcing producers to discount their crude.

Light sweet crude in the Bakken region cost $31.19 a barrel Tuesday, according to the commercial arm of Plains All America Pipeline L.P. Similar oil in the Eagle Ford region in South Texas cost $44.

"We'll commit our crude" to the Philadelphia refinery should a line be built, Volker said. "And in return for that, we would like to see a better differential, because it costs less to get there."

A midstream company is interested in building the link, Volker said, "but I shouldn't speak for them."

Also, the Associated Press reported that following a spate of explosive accidents involving North Dakota crude, the state began requiring companies Wednesday to remove certain liquids and gases from oil before it is loaded onto rail cars - a move industry and state regulators believe will make for safer shipments.

The rules, developed over the last year, require all crude from the state's oil patch to be treated by heat or pressure to reduce volatility before being loaded onto train cars.

"North Dakota's crude oil conditioning order is based on sound science and represents an important step in the ongoing work to ensure that oil-by-rail transportation is as safe as possible," Gov. Jack Dalrymple said in a statement.

Dozens of mile-long trains loaded with crude leave western North Dakota each week, each pulling more than 100 cars laden with about three million gallons of North Dakota crude.

Wayde Schafer, a North Dakota spokesman for the Sierra Club, called the new rules inadequate. "I have a real concern that we're still going to have a problem with rail cars exploding when they derail," Schafer said.

Source: Philly.com