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Washington House passes crude-by-rail bill, with change

Washington — The Washington state House of Representatives has passed a bill which would set new vapor pressure limits on crude sent into the state by rail, but with a major change which could prevent the standards from ever taking effect.

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The standards would prohibit a facility, including Washington's five refineries along the Puget Sound, from loading or unloading any crude from a rail tank car unless the oil has a vapor pressure of less than 9 psi.

But in a change approved by the House Friday, the new standards would only be triggered if the volume of crude delivered to facilities throughout the state for a calendar year increased more than 10% above the volume reported for calendar year 2018. This could cause refiners to keep crude-by-rail imports steady since Bakken operators have said they are incapable or unwilling to meet the 9 psi standard.

Capitol Crude podcast: Washington state bill to limit vapor pressure for crude oil shipped by rail would have wide-ranging impacts

"Refiners who currently import crude by rail only have to comply with the vapor pressure standard if their total annual crude by rail imports increase by more than 10% over the 2018 baseline," Washington State Representative Joe Fitzgibbon, a Democrat who introduced the change to the original bill, said in a statement through a spokesman Monday.

On Friday, Lynn Helms, North Dakota's top oil and gas regulator, said operators would not be able to condition Bakken crude to below that 9 psi level without removing valuable product, including butane, from the crude stream.

"It would severely devalue Bakken crude oil," Helms said.

North Dakota has threatened to sue Washington if the bill becomes law.

The bill was passed by a 53-40 vote in the Washington state House on Friday night. The state Senate, which passed the original bill by a 27-20 vote in March, will need to consider and approve the changes the House made the bill before it can be sent to Governor Jay Inslee, a Democrat, to potentially become law.

Tara Lee, an Inslee spokeswoman, declined to comment Monday on whether the governor would sign the bill into law.

"As with all legislation the governor and staff review carefully prior to taking any action on bills," she said. "Once it is delivered to our office from the legislature, then the governor has five days to take action."

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Pankti Mehta, newsdesk@spglobal.com