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Quantum Energy Efforts Featured in EnergyWire

Regulators Urged to Consider Crude Stabilization in Federal Rule Making Process

TEMPE, AZ -- (Marketwired) -- 06/13/14 -- Quantum Energy, Inc. (PINKSHEETS: QEGY), is pleased to reprint with full permission the following article from EnergyWire describing Quantum's efforts in Washington, D.C. urging that crude stabilization be considered in the Bakken rail transportation rule making process:

http://www.eenews.net/energywire/2014/06/10/stories/1060001007

Oil groups line up at White House over tank car standards

Blake Sobczak
E&E News
Tuesday, June 10, 2014

Quantum Energy Inc. claims to have no position on proposed oil tank car standards -- yet the oil field developer stopped by a White House office last week to discuss them anyway.

Russell Smith, Quantum's executive vice president of public affairs, said he met with the small but influential Office of Information and Regulatory Affairs to make sure regulators knew about the company's plans for "stabilizing" hot-to-handle crude from North Dakota's Bakken Shale play.

Bakken crude has earned a volatile reputation after a string of oil train derailments and fires. A 72-car oil train jumped the tracks and exploded in downtown Lac-Mégantic, Quebec, last July, killing 47 people and prompting regulators to warn that Bakken crude may be less stable than other types.

The deadly crash also set the stage for the "comprehensive" oil-by-rail rulemaking package now weaving its way through OIRA, part of the Office of Management and Budget. White House records show several oil companies, refiners and industry groups have met with administration officials and transportation regulators to shape new standards for the type of DOT-111 tank car long faulted for its puncture-prone design.

"We're not really taking a position on the tank car rule," said Smith, who attended June 2's meeting with lobbyists from FTI Consulting, OIRA representatives and Department of Transportation regulators. "All we're saying is, in making the rule, please consider what's going in the car in addition to the car itself."

Smith's company hopes to set up "21st-century energy centers" in North Dakota's Williston Basin capable of stripping the most volatile natural gas liquids out of Bakken crude before the commodity is loaded onto rail cars.

Oil producers have contested claims that Bakken crude is more volatile than other types, and the North Dakota Petroleum Council has conducted tests that it says show the crude is safe (EnergyWire, May 21).

Last month the oil industry's top lobbying group, the American Petroleum Institute, met with OIRA to air its views on tank car rules that could have a big impact in the Bakken, where well over 600,000 barrels of oil leaves the state daily by rail (EnergyWire, May 28). API said in a later statement that it is "critical" that the proposed rule should "achieve measurable safety improvements by using science and data to address accident prevention, mitigation and response."

Since then, several refiners, chemical companies and trade groups, including the American Chemistry Council and the American Fuel & Petrochemical Manufacturers (AFPM), have also met with OIRA about the tank car rules.

AFPM has conducted its own study of Bakken crude volatility and concluded even older-model DOT-111 rail tank cars can safely handle the oil, although the refining group detected Reid vapor pressure levels as high as 15.4 pounds per square inch (absolute) in some samples.

Reid vapor pressure offers a good indication of flammable gas content in a liquid such as crude. While 15.4 psi is well within even the oldest DOT-111 tank cars' safe pressure capacity, AFPM said in its survey of Bakken crude characteristics that vapor pressures of 10 psi or lower "are in the best interests of AFPM members."

Smith said Quantum intends to strip Bakken crude down to a Reid vapor pressure of 6 psi or lower and sell the separated gas liquids. The Tempe, Ariz.-based holding company also hopes to set up five micro-refineries modeled after a new joint project run by MDU Resources Group Inc. and Calumet Specialty Products Partners (EnergyWire, April 11, 2013). Once completed, that diesel facility will mark the first new refinery built in the United States in nearly 40 years.

"Since we're stabilizing [Bakken oil] upstream of our refineries, our refineries will actually be receiving 'stripped' crude," Smith said. "With a reasonably small increase in investment, we could be capable of stripping every drop of oil coming out of the Bakken."

The API said in a statement that "NGL removal is among the topics being considered by the experts who are developing with [the Pipeline and Hazardous Materials Safety Administration's] participation the new standard for classifying, handling, and transporting crude by rail, and API intends to review their work on the issue before taking a position."

API has repeatedly emphasized that Bakken crude poses no greater risk than other light oil varieties, a position Smith called "short-sighted."

"Right now, they are kind of the lone soldier among the players involved here saying [volatility] isn't an issue," Smith said of API. "Everyone else is saying, 'We know it's an issue -- now we have to figure out how we solve it.'"

Blake Sobczak
Reporter, EnergyWire
[email protected]
202-446-0400 (p)
202-737-5299 (f)
@BlakeSobczak (Twitter)

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About Quantum Energy, Inc.

QUANTUM ENERGY, INC. is a development stage, publicly traded, diversified holding company with offices in Williston, North Dakota. Quantum places an emphasis in refinery development, land holdings, oil and gas exploration, drilling, well completion and fuel distribution www.quantum-e.com.

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