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TC Energy shuts down Keystone pipeline after oil spill in Kansas Creek

TC Energy shuts down Keystone pipeline after oil spill in Kansas Creek

TC Energy shuts down Keystone pipeline after oil spill in Kansas Creek

Dec 8 (Reuters) – Canada’s TC Energy said on Thursday it had shut its Keystone pipeline, cutting off the flow of Canadian oil to US refineries after it spilled into Kansas Creek, and it was unclear why. How long will this shutdown last?

The size of the leak, which occurred about 20 miles south of a major junction in Steele City, Nebraska, is unknown.

The 622,000-barrel-per-day Keystone Line is a vital artery shipping heavy Canadian crude from Alberta to refiners in the US Midwest and Gulf Coast.

US Pipeline and Hazardous Materials Safety Administration (PHMSA) crews are investigating the leak, which occurred near Washington, Kansas, a town of about 1,000 people.

Keystone shut down the line at around 8 pm on Wednesday (0200 GMT Thursday) after the alarm was raised and the system pressure decreased. (trp.to) said in a release, It states that booms were being used to stop the creek.

“The system remains shut down as our crews actively respond and work to contain and recover the oil,” the release said.

TC announced a force majeure outage, according to a source with direct knowledge. Bloomberg previously reported TC’s announcement of the windfall.

TC did not immediately respond to a request for comment.

Force majeure refers to unforeseen external circumstances that prevent a party from fulfilling its obligations to a contract.

Two Keystone shippers said TC has not yet informed them how long the pipeline could be closed.

TC shares declined 0.2% in Toronto.

The closure of Keystone would disrupt deliveries of Canadian crude to both Cushing, Oklahoma and the US storage hub in the Gulf, where it is processed by refiners or exported.

The shutdown is expected to increase discounts on Western Canada Select (WCS) heavy oil from Alberta to US crude, which was already high due to a lack of demand for heavy, sour Canadian oil.

According to a broker, WCS for December delivery is trading at $33.50 a barrel from WTI, a big discount from Wednesday’s close of $27.50 a barrel below the benchmark.

“It’s really the worst-case scenario if this outage is going to be prolonged,” said Rory Johnson, founder of the energy newsletter Commodity Context, noting that if the price drops further, shippers moving crude by rail will be forced to move. You can choose to do so.

BMO analyst Randy Olenberger said Hardesty, Alberta, has enough storage space until the pipeline is back online.

Steel City is roughly the junction where the Keystone splits, with one section carrying crude to Illinois refineries and the other carrying oil south to Oklahoma and the Gulf Coast.

If the spill is located south of the junction, the TC may be able to quickly reopen the section to Illinois, RBC analyst Robert Quan said in a note.

Quan said previous shutdowns typically lasted about two weeks, but this one could last longer because a water body is involved.

According to PHMSA data, there have been seven spills at Keystone since it became operational in June 2010. According to the PHMSA, the largest was in December 2017, when more than 6,600 barrels were spilled in South Dakota, and in November 2019, more than 4,500 barrels were spilled in North Dakota.

On 15 November, TC announced that it would turn down the volume on the pipeline due to some severe weather-related event, without specifying the size or duration of the restrictions.

Reporting by Arpan Varghese and Brijesh Patel in Bengaluru, Rod Nickel, Nia Williams and Arathi Somashekar; Editing by Toby Chopra, Jason Neely, David Evans, Alexander Smith and Andrea Ricci

Our Standards: Thomson Reuters Trust Doctrine.

rod nickel

Thomson Reuters

Covers energy, agriculture and politics in Western Canada with the energy transition a key area of ​​focus. Has had brief reporting stints in Afghanistan, Pakistan, France and Brazil and has covered Hurricane Michael in Florida, Tropical Storm Nate in New Orleans and the 2016 Alberta wildfires and the campaign trail of political leaders during two Canadian election campaigns.



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