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The Keystone pipeline was shut down after a 14,000 barrel oil spill in Kansas

The Keystone pipeline was shut down after a 14,000 barrel oil spill in Kansas
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8 December (Reuters) – Canada’s TC Energy shut down its Keystone pipeline in the United States after more than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest oil spills in the United States in nearly a decade .

The cause of the leak, which occurred in Kansas about 20 miles (32 km) south of a major intersection in Steele City, Nebraska, is unknown. It is the third spill of several thousand barrels of crude oil in the pipeline since it opened in 2010.

The 622,000 barrels per day Keystone Line is a major artery transporting Canadian heavy crude oil from Alberta to refineries in the US Midwest and Gulf Coast. It is unclear how long the closure will last.

There have been no impacts on drinking water wells or the public, the US Environmental Protection Agency said in a statement, although surface water at Mill Creek was affected.

Kellan Ashford, spokesman for EPA Region 7, which includes Kansas, said the cause of the leak was still unclear as of Thursday night.

TC mobilized about 100 people to respond to the spill while EPA dispatched two coordinators, Ashford said. Washington County Emergency Management and the Kansas Department of Health and Safety were also on site.

Keystone shut down the line around 8 p.m. CT Wednesday (0200 GMT Thursday) after alarms went off and system pressure dropped, TC (TRP.TO) said in a press release. Booms were said to have been used to contain the spill.

BIGGEST ONSHORE SPILL IN YEARS

According to the US Pipeline and Hazardous Materials Safety Administration (PHMSA), this would be the largest crude oil spill since a Tesoro pipeline spilled more than 20,000 barrels of oil in North Dakota in October 2013.

PHMSA is also investigating the leak, which occurred near Washington, Kansas, a city of about 1,000 people.

There have been seven keystone spills since commissioning in June 2010, according to PHMSA data. The largest were in December 2017, when more than 6,600 barrels were spilled in South Dakota, and November 2019, when more than 4,500 barrels were spilled in North Dakota, according to PHMSA figures.

“It’s troubling to see so many failures and so much spilled oil from any pipeline, but it’s especially troubling with such a relatively new pipeline,” said Bill Caram, chief executive of the not-for-profit Pipeline Safety Trust, in a statement.

The spill comes about two months after TC announced it would temporarily increase the system’s capacity to test certain operations. TC has special permission to operate Keystone at a higher stress level than other U.S. crude lines, according to a 2021 Government Accountability Office (GAO) on the 2017 and 2019 oil spills.

SHUTDOWN DURATION UNCERTAIN

TC declared force majeure over the outage, according to a source with direct knowledge, referring to unexpected external circumstances preventing a party from meeting its obligations. TC did not respond to a request for comment.

Two Keystone shippers said TC hasn’t told them how long the pipeline may be idle.

Keystone’s closure will hamper shipments of Canadian crude both to the US storage center in Cushing, Oklahoma, and to the Gulf, where it is processed by refiners or exported.

The closure is expected to widen Alberta’s Western Canada Select (WCS) heavy oil discount to US crude, which was already high due to weak demand for heavy, sour Canadian oil.

WCS for December delivery was trading at $33.50 a barrel below WTI, according to a broker, compared to Wednesday’s settlement of $27.50 a barrel below the benchmark.

“It’s really a worst-case scenario if this outage lasts long,” said Rory Johnston, founder of energy newsletter Commodity Context, noting that if prices continue to fall, shippers will choose to transport crude oil by rail could. In addition, prices for heavy grades could rise in the Gulf Coast and Latin America, analysts said.

Steele City is roughly the intersection where Keystone splits, with one segment transporting crude oil to refineries in Illinois and the other transporting oil south to Oklahoma and the Gulf Coast.

If the spill is south of the intersection, TC may be able to restart the segment quickly after Illinois, RBC analyst Robert Kwan said in a note.

Previous shutdowns have generally lasted about two weeks, but this could be longer given the body of water involved, Kwan said.

TC shares closed down 0.1% in Toronto.

Reporting by Arpan Varghese, Brijesh Patel and Deep Vakil in Bengaluru, Rod Nickel, Nia Williams and Arathy Somasekhar; Edited by Josie Kao and Stephen Coates

Our standards: The Thomson Reuters Trust Policy.

Genus Nickel

Thomson Reuters

Covers energy, agriculture and politics in Western Canada with a major focus on the energy transition. Has done brief reports in Afghanistan, Pakistan, France and Brazil, covering Hurricane Michael in Florida, Tropical Storm Nate in New Orleans and the 2016 Alberta wildfires, as well as the campaign paths of political leaders during two Canadian campaigns.

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