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$100 million worth of U.S. energy revolution going up in smoke

In North Dakota, technology has unlocked the oil and gas of the U.S. shale revolution, but it’s not without growing pains. In the Bakken region near Williston, North Dakota, we found farmers who can’t get their product to market while more than one quarter of the natural gas being produced is going, not to gas plants, but to waste. Also, oil shipped out to refineries on trains has been involved in a string of fiery accidents.

North Dakota produces more than one million barrels of oil a day, according to the U.S. Energy Information Administration. Elsewhere in the country only Texas remains above the million barrel mark. According to reporting in the New York Times by the Energy Policy Research foundation, about 75% of it is then pumped into rail cars at loading stations in the Bakken region like one we visited in Tioga. From there it heads out to the refineries by train. But a handful of oil-train accidents in the last 18 months in the U.S., and one in Quebec that killed 47 last summer (with crude from North Dakota), have become a national safety concern.

Why is so much oil traveling this way?

Kathleen Neset of Neset Consulting advises the oil and gas industry. She says the problem is a lack of pipeline infrastructure: “The safest most secure way is to get the pipelines in place. That takes time. In the meantime the rail facility is here - the rails are already here.”

She says more oil rail cars, though, mean more chances for accidents. “We still have to up our game when it comes to safety,” she adds.

Also needing to travel by rail? The state’s other big commodities: The ones cultivated on farms.

We visited a grain elevator in the Powers Lake, North Dakota, where farmers bring their harvested crops to be sold and shipped. The manager, Douglas Eckhert, says most of his silos are brimming with grain, and he’s been unable to ship out any wheat or durum for six weeks because his shipper cannot get the rail cars to transport it. He’s concerned about the business’ bottom line, as was a farmer we met who was bringing in his grain. Why the delays?

‘‘Because the oil has to move, and there aren’t enough engines between all the different facilities to get all the rail cars moved that they want,” Eckert believes.

The state’s largest railroad, BNSF Railway, owned by Warren Buffett, told us in a statement:

BNSF is not favoring crude shipments over other shippers like agriculture. This is a case of rapid growth for several commodities using parts of our railroad network that hadn’t previously seen that kind of volume … BNSF is investing heavily to grow and maintain our network, and we are utilizing all means necessary to improve service across our network.

BNSF also reports they are moving a record amount of grain this year, yet food makers like General Mills have said the delays are slowing production, according to the New York Times.

Then, there’s the gas. A common site in the Bakken accompanying oil production is a burning flame nearby. It’s natural gas burning off, a controversial practice known as flaring, because Neset says, it’s a lost revenue and a lost resource.

One hundred million dollars worth of gas is lost per month, NBC News reports, because there isn’t enough infrastructure in place to capture and transport it.

“We are flaring it because we don’t have these pipelines in place,” says Neset.”You cannot truck it and you can’t put it onto a rail car -- it has to go into a pipeline.”

You can truck the gas if you take it down to negative 260 degrees and liquify it. We visited a liquified natural gas plant in Tioga, but multiple sources tell us it’s the only one up and running right now in the Bakken.

New regulations recently went into effect to limit flaring, with targets to reduce the gas flared to 23% in January 2015 and 10% by 2020, compared to 26% currently, according to the North Dakota Oil and Gas Division. So then less of the U.S. energy renaissance, will go up in flames.

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