Three Companies Fined For Misclassifying Oil

WILLISTON, N.D. – Notices sent to three oil companies operating in North Dakota cite 17 shipments of Bakken crude that investigators say were not properly classified under federal law.

Spokesmen for the companies facing potential fines totaling $93,000 — Hess Corp., Marathon Oil Co. and Whiting Oil and Gas Corp. – all said Wednesday they are continuing to review the allegations issued this week by the U.S. Department of Transportation.

The notices of probable violations stem from Operation Classification, also known as the Bakken Blitz, a series of inspections launched in summer of 2013 by the Pipeline and Hazardous Materials Safety Administration.

Most of the violations involved oil that the inspectors said was assigned an incorrect packing group, which indicates the level of danger presented by hazardous materials.

“Proper classification will ensure that the material is placed in the proper package and that the risk is accurately communicated to emergency responders,” said a news release issued this week by PHMSA. “Shipping crude oil – or any hazardous material – without proper testing and classification could result in material being shipped in containers that are not designed to safely store it, or could lead first responders to follow the wrong protocol when responding to a spill.”

According to the notices:

— Hess Corp. faces up to $51,350 in fines stemming from a total of 13 separate shipments that investigators who visited the Hess Tioga facility last October say were misclassified. Shipping papers for seven trucks identified oil as Packing Group II, which means medium danger, but testing of samples taken from the trucks showed the oil should have been classified as Packing Group I, meaning great danger.

Investigators also found six shipments that listed the shipping description in the wrong order.

– Marathon faces up to $30,000 in fines stemming from three shipments that investigators say should have been labeled Packing Group I, but they were labeled Packing Group II.

— Whiting Oil and Gas Corp. faces a potential fine of $12,000 for classifying oil as Packing Group III, which means minor danger, but investigators say the oil should have been classified as Packing Group II, which means medium danger.

The companies have 30 days to respond to the notices. Their options are to pay the proposed assessment, send an informal response or request a formal hearing.

Spokesmen for all three companies said they could not yet respond to the specific allegations because company officials were still reviewing the notices.

Marathon Oil said in a statement it’s committed to safe and responsible operations.

Jack Ekstrom, spokesman for Whiting, said the company is a leader on environmental safety issues. Ekstrom said the company transfers its ownership of crude oil when it is sold to purchasers.

“Whiting Petroleum Corp. does not transport crude oil via truck or rail,” Ekstrom said. “We are not in the transportation business. We sell it.”

PHMSA could have proposed up to $75,000 in fines for each violation, according to the notices. The maximum penalty the agency can impose for violations that result in death, severe injury or substantial destruction of property is $175,000.