Following a 14,000-barrel oil spill in Kansas, the Keystone pipeline was shut down.
In one of the greatest crude oil disasters in the United States in almost a decade, more than 14,000 barrels of crude oil poured into a creek in Kansas, prompting Canadian company TC Energy (NYSE:TRP) to shut down its Keystone pipeline in the country.
Unknown is what caused the leak, which happened in Kansas approximately 20 miles (32 km) south of a crucial intersection in Steele City, Nebraska. Since the pipeline’s first opening in 2010, there have been three spills totaling several thousand barrels of petroleum.
The 622,000 barrel-per-day Keystone line is a vital artery carrying heavy Canadian crude from Alberta to refineries in the U.S. Gulf Coast and the Midwest. How long the closure will be in effect is unknown.
Although Mill Creek’s surface water was impacted, neither the public nor drinking water wells were, according to a statement from the US Environmental Protection Agency.
On Thursday evening, Kellan Ashford (NYSE:AINC), EPA Region 7 spokesperson, stated that it was still unknown what caused the spill in Kansas.
According to Ashford, TC had sent out about 100 responders to the spill, while the EPA had sent out two coordinators. Kansas’ Department of Health and Safety, as well as Washington County Emergency Management, were also present.
Around 8 o’clock, Keystone shut the line down. CT on Wednesday (0200 GMT on Thursday) as a result of alarms going off and the system losing pressure, according to a TC release. It stated that the spill was being contained with booms.
According to a statement released by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA): late on Thursday, the pipeline must remain closed until the regulator approves a restart. In addition, when Keystone is resumed, it will need to run at a lower pressure in the line’s damaged section.
The biggest ocean spill in years
This would be the biggest crude oil leak since a Tesoro pipeline spilled more than 20,000 barrels of oil in North Dakota in October 2013, according to PHMSA data.
The leak, which happened close to the 1,000-person hamlet of Washington, Kansas, is also being looked into by PHMSA.
According to PHMSA records, there have been seven spills at the Keystone pipeline since it started operating in June 2010. The most significant spill occurred in South Dakota in December 2017, when more than 6,600 barrels spilled, according to PHMSA data.
According to Bill Caram, executive director of the organisation Pipeline Safety Trust, “it is alarming to see so many failures and so much oil spilled from any system, but it is especially troubling from such a relatively new pipeline.”
About two months after TC announced it would temporarily enhance system capacity to test specific operations, there was a spill. According to a 2021 Government Accountability Office assessment, TC has a special permit to run Keystone with a higher stress level than other U.S. crude lines.
Uncertain Duration of the Shutdown
According to a source with firsthand knowledge, TC invoked force majeure due to the outage, which is a legal term for unforeseen external events that prevent one party from performing its responsibilities under a contract. An inquiry for comment from TC was not answered.
Two Keystone shippers said that TC had not yet informed them of the potential length of the pipeline closure.
The closure of Keystone will prevent delivery of Canadian crude to the Gulf, where it is refined or exported, as well as to the U.S. storage centre in Cushing, Oklahoma.
Because there is little market for heavy, sour Canadian oil, the discount on Western Canada Select (WCS) heavy oil from Alberta to U.S. crude is projected to widen as a result of the shutdown.
According to one broker, WCS for December delivery traded at $33.50 a barrel less than WTI, up from the settle on Wednesday of $27.50 a barrel less.
According to Rory Johnston, editor-in-chief of the energy newsletter Commodity Context, “it’s really a worst-case scenario if this outage is prolonged,” adding that if the price drops even further, shippers might decide to transport crude by rail.
Additionally, heavy Gulf Coast grades and grades from Latin America can experience an increase in price, according to analysts.
The Keystone pipeline essentially splits at Steele City, with one part transporting crude to Illinois refineries and the other south to Oklahoma and the Gulf Coast.
According to a letter from RBC analyst Robert Kwan, TC could be able to swiftly restart the route to Illinois if the leak is south of the junction.
Due to the involvement of a water body, this shutdown may last longer than previous ones, which have typically lasted two weeks, according to Kwan.
In Toronto, TC stock ended with a 0.1% loss.