Dec 8 (Reuters) – Canada’s TC Energy said on Thursday it had shut down its Keystone pipeline, hampering the flow of Canadian oil to U.S. refineries after a spill in a Kansas stream, and it was unclear how long the shutdown would last.
The size and cause of the leak, which occurred about 20 miles south of a key junction in Steele City, Nebraska, is unknown.
The 622,000 barrel per day Keystone line is a critical artery that transports heavy Canadian crude from Alberta to refineries in the US Midwest and the Gulf Coast.
US Pipeline and Hazardous Materials Safety Administration (PHMSA) personnel are investigating the leak, which occurred near Washington, Kansas, a city of about 1,000 people.
Keystone closed the line around 8 p.m. (TRP.TO) said in a release. She said booms were being used to contain the spill.
“The system remains closed while our crews actively respond and work to contain and recover the oil,” the statement said.
There have been no effects on drinking water wells or the public, the US Environmental Protection Agency (EPA) said in a statement, although Mill Creek surface waters were affected. It dispatched two coordinators to the site to oversee TC Energy’s response and assess the cause of the spill.
TC declared force majeure due to the blackout, according to a source with direct knowledge, which refers to unexpected external circumstances that prevent one of the parties to a contract from fulfilling its obligations. TC did not respond to a request for comment.
Two Keystone shippers said they had not yet been notified by TC how long the pipeline might be closed.
The Keystone closure will hamper deliveries of Canadian crude both to the US storage hub in Cushing, Oklahoma and to the Gulf, where refineries process or export it.
The shutdown is expected to increase the discount on Alberta’s Western Canada Select (WCS) heavy oil to US crude, which was already high due to lackluster demand for Canadian heavy and sour oil.
WCS for December delivery was trading at $33.50 a barrel below WTI, a greater discount than Wednesday’s close of $27.50 a barrel below the benchmark, according to a broker.
“It’s really the worst case if this disruption is long-lasting,” said Rory Johnston, founder of energy newsletter Commodity Context, noting that if the price falls further, shippers may choose to move crude by rail.
The Hardisty, Alberta, facility has enough storage space until the pipeline comes back online, BMO analyst Randy Ollenberger said.
Steele City is roughly the crossroads where Keystone splits, with one segment transporting crude to refineries in Illinois and the other transporting oil to southern Oklahoma and the Gulf Coast.
If the spill is located south of the crossing, TC could quickly restart the segment to Illinois, RBC analyst Robert Kwan said in a note.
Previous closures have typically lasted around two weeks, but this could last longer as it involves a body of water, Kwan said.
There have been seven spills at Keystone since it came online 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 in November 2019, when more than 4,500 barrels were spilled in North Dakota, according to PHMSA.
the nov. 15, TC announced that reduce volumes in the pipeline due to some incidents related to severe weather, without specifying the size or duration of the curbs.
TC shares ended 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 Alexander Smith, Andrea Ricci, and Josie Kao
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