SAFETY ALERT - #54-2000

BUTANE IN CRUDE OIL CAN RELEASE H2S

RELEASE DATE: NOVEMBER, 2000

Description:

In September, CAPP provided an Information Bulletin (listed below) to update members about the potential
implications and impacts of higher than normal levels of butane present in some Western Canadian crude oil
streams. Further to that bulletin CAPP would like to advise that an additional safety-related concern has been raised
with regard to butane blending.

CAPP Information Bulletin-Butane in Crude Oil – September 13, 2000

The industry's Crude Oil Equalization Committee has received reports concerning a trend of higher than normal
levels of butane present in western Canadian crude oil streams. The Equalization Committee has requested CAPP's
assistance to address the potential problems being created. CAPP's Crude Oil Committee is providing this
Information Bulletin to update members on the potential implications and impacts of butane blending on the
producing community.

Some (not all) crude oil refiners processing western Canadian crude oil have expressed concerns about the high
levels of butane blended into crude oil. Some refiners have recorded increased butane recoveries that do not
correspond to assay information, when processing western Canadian crude oil. Heavy crude oil, which is blended
with condensate to meet pipeline viscosity specifications, normally has some butane present. Typically, light crude
oils are not blended with butane.

The presence of higher than normal butane in crude oil can have significant negative impacts on a refiner's
operations. Butane impacts reduce refining capacity, generate higher operating costs, create butane disposal costs
and, in extreme situations, can cause refinery upsets. More specifically:

When a refiner processes butane blended crude oil, the refinery's total processing capacity becomes limited by
the capacity of the refinery to strip the butane from the crude oil. Consequently, higher than normal butane-rich
crude oil may limit/reduce the volume of oil that can be refined.
Operating costs, for processing higher than normal butane blends, increase due to the incremental costs related
to processing and handling the light-ends.
Once recovered at the refinery, the butane must be disposed. Many refiners are able to utilize isobutane
throughout the year. During the winter, normal butane is blended into the gasoline pool. In the summer,
however, refineries may be unable to utilize the recovered butane. Summer Reid vapor pressure limitations
restrict gasoline blending. Thus, refiners are forced to either sell the normal butane outright or store it until
winter. While butane is regularly used in the refining process, refiners typically acquire sufficient butane volumes
independently, without paying a crude oil price as a blended crude oil product.

A higher than normal presence of butane in crude oil can have an adverse impact on the refining value of the crude
oil stream. Where butane is a problem, those refiners will preferentially choose crude oil streams with lower butane
content or discount the high butane streams. If this scenario occurs, overall netbacks for those streams could be
impacted negatively.

Butane blending also impacts the quality equalization process. For crude oil going into a common stream, the
addition of butane will reduce the blended crude oil density and sulphur content relative to crude at other locations
where blending does not occur. Under the current equalization system, such butane-rich crude oil would be
assessed a lower equalization penalty resulting in higher relative netbacks compared to non butane blended crude
oil.

DISCLAIMER:

THIS SAFETY ALERT IS DESIGNED TO PREVENT SIMILAR INCIDENTS BY COMMUNICATING THE INFORMATION AT THE EARLIEST POSSIBLE OPPORTUNITY. ACCORDINGLY, THE INFORMATION
MAY CHANGE OVER TIME. IT MAY BE NECESSARY TO OBTAIN UPDATES FROM THE SOURCE BEFORE RELYING UPON THE ACCURACY OF THE INFORMATION CONTAINED HEREIN. THIS MATERIAL
IS PRESENTED FOR INFORMATION PURPOSES ONLY. MANAGERS AND SUPERVISORS SHOULD EVALUATE THIS INFORMATION TO DETERMINE IF IT CAN BE APPLIED TO THEIR OWN SITUATIONS
AND PRACTICES.

1538 – 25 AVENUE NE CANADIAN PETROLEUM SAFETY COUNCIL PH: (403) 509-4871

CALGARY, AB T2E 8Y3 FAX: (403) 291-9408
www.enform.ca safety@enform.ca
SAFETY ALERT - #54-2000
BUTANE IN CRUDE OIL CAN RELEASE H2S
RELEASE DATE: NOVEMBER, 2000
Butane blending can also impact pipeline operations and lead to increases in pipeline tolls. Crude oil pipelines are
designed to handle liquid products. Higher than normal butane blended crude oil means pipelines may suffer a loss
of capacity due to higher back-pressure. The presence of excessive butane levels in crude oil can also lead to
higher pipeline loss allowances through:

evaporative losses in tankage,

shrinkage resulting from the commingling of butane-rich crude with other crudes, and
potential measurement errors due to cavitation in meter systems.

Other pipeline-related risks and safety concerns include elevated hydrocarbon and sulphur emissions and potential
tank roof sinkage, if a significant gas evolution occurs in a tank.

The CAPP Crude Oil Committee will continue to address this issue. Should you have any comments or wish to
further discuss this matter, please contact either: Onno DeVries, Manager Crude Oil and Fiscal Policy, at (403) 267-
1137, email devries@capp.ca, or your company's representative on the CAPP Crude Oil Committee.

The higher than normal butane levels in crude could elevate H2S gas at storage tanks, tank trucks and sample
points potentially posing a serious safety hazard. Normally H2S escapes only slowly from crude, but butane gas
flashing off depressurized crude can carry dissolved H2S with it. All operators, especially crude oil truck drivers as
well as pipeline and terminal operators, should be cautious when working around field gathering tanks and pipeline
terminals where oil is stored and vapors accumulate.
The butane itself can also pose risks to personnel. The Alberta Government OH&S Chemical Hazards
regulation requires exposure over an 8-hour shift for Butane to be kept below 800 ppm, and CAPP recommends
that exposure at all time be kept below 10% of the LEL (Lower Explosive Limit). See CAPP Information Letter
on "Occupational Health and Safety of Light Hydrocarbons" at www.capp.ca/default.asp?V_DOC_ID=730

CAPP has been working with industry to further assess this issue.

DISCLAIMER:

THIS SAFETY ALERT IS DESIGNED TO PREVENT SIMILAR INCIDENTS BY COMMUNICATING THE INFORMATION AT THE EARLIEST POSSIBLE OPPORTUNITY. ACCORDINGLY, THE INFORMATION
MAY CHANGE OVER TIME. IT MAY BE NECESSARY TO OBTAIN UPDATES FROM THE SOURCE BEFORE RELYING UPON THE ACCURACY OF THE INFORMATION CONTAINED HEREIN. THIS MATERIAL
IS PRESENTED FOR INFORMATION PURPOSES ONLY. MANAGERS AND SUPERVISORS SHOULD EVALUATE THIS INFORMATION TO DETERMINE IF IT CAN BE APPLIED TO THEIR OWN SITUATIONS
AND PRACTICES.

1538 – 25 AVENUE NE CANADIAN PETROLEUM SAFETY COUNCIL PH: (403) 509-4871

CALGARY, AB T2E 8Y3 FAX: (403) 291-9408
www.enform.ca safety@enform.ca