TC Energy Shuts Down Keystone Pipeline After Kansas Creek Oil Spill

Dec 8 (Reuters) – Canada’s TC Power stated on Thursday it had shut down its Keystone pipeline, hampering the circulate of Canadian oil to U.S. refineries after a spill in a Kansas stream, and it was unclear how lengthy the shutdown would final.

The scale of the leak, which occurred about 20 miles south of a key junction in Steele Metropolis, Nebraska, is unknown.

The 622,000 barrel per day Keystone line is a important artery that transports heavy Canadian crude from Alberta to refineries within the US Midwest and the Gulf Coast.

US Pipeline and Hazardous Supplies Security Administration (PHMSA) personnel are investigating the leak, which occurred close to Washington, Kansas, a metropolis of about 1,000 individuals.

Keystone closed the road round 8 p.m. (TRP.TO) stated in a launch. He stated obstacles have been getting used to comprise the stream.

“The system stays closed whereas our crews actively reply and work to comprise and get well the oil,” the assertion stated.

TC declared power majeure because of the blackout, based on a supply with direct data. Bloomberg beforehand reported on TC’s power majeure declaration.

TC didn’t instantly reply to a request for remark.

Drive majeure refers to sudden exterior circumstances that forestall one of many events to a contract from fulfilling its obligations.

Two Keystone shippers stated they’d not but been notified by TC how lengthy the pipeline could be closed.

TC shares have been down 0.2% in Toronto.

The Keystone closure will hamper deliveries of Canadian crude each to the US storage hub in Cushing, Oklahoma and to the Gulf, the place refineries course of or export it.

The shutdown is predicted to extend the low cost on Alberta’s Western Canada Choose (WCS) heavy oil to US crude, which was already excessive because of lackluster demand for Canadian heavy and bitter oil.

WCS for December supply was buying and selling at $33.50 a barrel beneath WTI, a better low cost than Wednesday’s shut of $27.50 a barrel beneath the benchmark, based on a dealer.

“It is actually the worst case if this disruption is long-lasting,” stated Rory Johnston, founding father of power e-newsletter Commodity Context, noting that if the worth falls additional, shippers might select to maneuver crude by rail.

Hardisty, Alberta has sufficient cupboard space till the pipeline comes again on-line, BMO analyst Randy Ollenberger stated.

Steele Metropolis is roughly the crossroads the place Keystone splits, with one phase transporting crude to refineries in Illinois and the opposite transporting oil to southern Oklahoma and the Gulf Coast.

If the spill is positioned south of the crossing, TC might shortly restart the phase to Illinois, RBC analyst Robert Kwan stated in a notice.

Earlier closures have sometimes lasted round two weeks, however this might last more because it includes a physique of water, Kwan stated.

There have been seven spills at Keystone because it got here on-line in June 2010, based on PHMSA information. The most important have been in December 2017, when greater than 6,600 barrels have been spilled in South Dakota, and in November 2019, when greater than 4,500 barrels have been spilled in North Dakota, based on PHMSA.

On November 15, TC introduced that it might cut back pipeline volumes because of some incidents associated to extreme climate, with out specifying the dimensions or length of the restrictions.

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

Our requirements: The Thomson Reuters Belief Ideas.

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