Keystone pipeline leaks in North Dakota
The Keystone crude pipeline was shut after leaking thousands of barrels of crude in North Dakota, the third spill along the pipeline’s route in less than three years.
TC Energy Corp.’s 590,000 barrel-a-day pipeline that carries crude from Alberta to refineries in the U.S. Midwest and Gulf Coast ruptured Tuesday near the city of Edinburg, said Brent Nelson, an emergency manager for Walsh County.
About 9,120 barrels were released, some of which affected a wetland but not any sources of drinking water, the state’s Department of Environmental Quality reported.
The 383,000-gallon spill marks the second significant spill in two years along the line that carries Canadian tar sands oil through seven states, regulators said Thursday.
Crews shut down the pipeline after the leak was discovered, said Karl Rockeman, North Dakota’s water quality division director. It remained closed Thursday.
The Calgary, Alberta-based company formerly known as TransCanada said in a statement that the leak affected about 22,500 square feet of land.
TC Energy declared force majeure on the pipeline system after the shutdown, according to people familiar with the matter.
An emergency response team has contained the affected area, and the system is shut from Hardisty, Alberta to Cushing, Okla., and to Wood River/Patoka, Ill., the company said in a statement.
TC Energy also reduced rates on the Marketlink pipeline, an extension of Keystone that runs from Cushing to Port Arthur, people familiar with the matter said.
The shutdown stands to affect Gulf Coast refiners seeking alternative heavy crude supplies amid sanctions on Venezuela, lagging output from Mexico and OPEC production cuts.
At the same time, Alberta’s oil producers are struggling to cope with production limits imposed earlier this year when too much oil encountered too few pipelines, causing prices to collapse.
Heavy Western Canadian Select crude’s discount to West Texas Intermediate futures widened $19 a barrel Thursday, the widest since December, data compiled by Bloomberg show.
After the Keystone spill in South Dakota in 2017, the discount widened from about $11 a barrel to more than $25 a barrel. In the Gulf Coast, heavy Canadian crude was about $1.50 a barrel stronger than before the spill, according to market participants.
Gulf Coast refiners could seek medium grades of sour crude to replace the heavy Canadian barrels, Kevin Birn, IHS Markit’s director of North American crude oil markets, said by phone.
“You could see refiners pivot to alternative sources of supply,” he said. “There will be some flexibility in the system to address this.”
TC Energy said the area affected by the spill, estimated to be 1,500 feet in length by 15 feet wide, is less than the size of a football field and that the amount of oil released would half-fill an Olympicsized swimming pool.
The spill comes as TC Energy seeks to build the controversial Keystone XL pipeline.
The company said Keystone probably was the source of a spill in Missouri in February that shut a segment of the line.
In 2017, a spill in South Dakota reduced rates on the line for months, causing Canadian oil prices to collapse.
The long-delayed Keystone XL oil pipeline has been on the drawing board for a decade.
The 1,200-mile pipeline would help carry 830,000 more barrels of crude a day from Alberta’s oil sands to U.S. Gulf Coast refineries.
The project has been a top target of environmentalists, who argue that the pipeline would contribute to catastrophic climate change.
No new export pipelines out of Canada are planned until late next year at the earliest, when Enbridge Inc.’s Line 3 is scheduled to start operation.
Two other pipeline projects including the government-owned Trans Mountain line to Vancouver area as well as the proposed Keystone XL have faced regulatory and legal delays in addition to fierce opposition from environmental groups and landowners.
North Dakota regulators were notified late Tuesday of the leak. The company and regulators said the cause was being investigated.