Authorities in Albany County, New York have issued a moratorium on Bakken crude oil processing at the Port of Albany pending a public health investigation.
The moratorium applies to Global Partners LP and its plans to increase the processing at the port of crude oil from North Dakota's Bakken region, which authorities are concerned may pose a threat to public safety due to its extreme volatility and flammability.
The moratorium follows a January decision by the New York Governor's Office ordering state agencies to conduct a review of safety procedures and emergency response systems for crude oil shipments from North Dakota's Bakken region.
According to the moratorium, residents could be at risk due to the heating and storage of Bakken crude at the port because of the high level of volatility and flammability as well as the possible substandard condition of tank cars used to transport this crude via train into the county.
A recent investigation by the Federal Railroad Administration found that shippers sometimes misclassified the oil they were offering for sale, loading it into tankers that weren't stout enough to safely carry materials in the highest hazard category.
Government investigators found crude oil being transported from the Bakken region was misclassified in nearly one in five samples of truck shipments en route to rail loading stations.
This sets up some obstacles for Global Partners LP, which is seeking to build several boilers to heat crude oil before it is loaded and shipped for refining. Global Partners has the capacity to transport up to 160,000 barrels a day of crude by rail to its Albany terminal.
The moratorium was welcomed by environmental organizations. "The moratorium is the necessary response of local officials to protect their communities in the face of continued foot-dragging and hollow incremental measures by the federal government on dangerous oil trains," media quoted Mollie Matteson, Northeast representative for the Center for Biological Diversity, as saying.
Last month, US Federal regulators issued an emergency order requiring more stringent testing of crude oil before shipment by rail to determine how sensitive the cargo is to explosion or fire.
The order came as response to a string of train accidents since last summer involving oil from the Bakken region of North Dakota and Montana. There have been 10 derailments of trains carrying crude in North America during the past year.
The Transportation Department said the order is aimed at Bakken crude but will cover shipments from anywhere. The testing requirement goes into effect immediately with a stiff penalty for noncompliance.
US Transportation Department said that order also would place crude oil under more protective sets of hazardous materials shipping requirements, rather than allowing some shipments to be treated as less dangerous.
Under the emergency order, companies that ignore the order may be fined as much as $175,000 a day for each violation while the individuals may also be subject to fines and up to 10 years in prison.
Written by Charles Kennedy at Oilprice.com.