Keystone pipeline shuts down after 14,000 barrel oil spill in Kansas

Canada’s TC Energy has shut down its Keystone pipeline in the US after more than 14,000 barrels of oil spilled into Kansas Creek.

The cause of the leak, which occurred approximately 20 miles (32 km) south of a critical junction in Steel City, Nebraska, Kansas, is unknown. This is the third time thousands of barrels of oil have spilled from the pipeline since it opened in 2010.

With a capacity of 622,000 barrels per day, the Keystone line is an important artery transporting heavy Canadian crude from Alberta to refiners in the US Midwest and Gulf Coast. It’s unclear how long the closure will last.

The U.S. Environmental Protection Agency said in a statement that while Mill Creek’s surface water was affected, drinking water wells and the general public were unaffected.

Kellan Ashford, spokesperson for EPA Region 7, which includes Kansas, said Thursday night that the cause of the leak is still unknown.

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

Keystone closed the line around 8 pm CT Wednesday after an alarm sounded and system pressure dropped, TC said in a release. A boom was used to contain the spill, he said.

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) has ordered the pipeline to remain closed until regulators approve its reopening, it said in a statement late Thursday. Additionally, Keystone must operate at lower pressures in the affected segment of the line on restart.

Largest land spill in years

According to PHMSA data, this would be the largest oil spill since more than 20,000 barrels of oil spilled from the Tesoro pipeline in North Dakota in October 2013.

PHMSA is also investigating a leak near Washington, Kansas, a town of about 1,000 people.

According to PHMSA data, there have been 7 keystone spills since it began operations in June 2010. The largest was in December 2017 in South Dakota when he spilled more than 6,600 barrels, according to PHMSA statistics.

Keystone pipeline
Where the Keystone Pipeline crosses Route 36 just east of Washington, Kansas on December 8, 2022. (Fred Knapp/Nebraska Public Media News via Reuters)

Bill Callum, executive director of the nonprofit Pipeline Safety Trust, said in a statement, “It’s troubling to see so many failures and so much oil spilling from pipelines. But it’s especially troubling in a relatively new pipeline like this.”

The leak comes about two months after TC announced it would temporarily increase the system’s capacity to test certain operations. According to a 2021 Government Accountability Office report, TC has special clearance to operate Keystone at higher stress levels than other U.S. crude lines.

Unknown length of shutdown

Two Keystone shippers said the TC had not yet announced how long the pipeline would be closed.

Keystone’s closure will prevent delivery of Canadian crude to the US storage hub in Cushing, Oklahoma, and to Gulf countries where it is processed or exported by refiners.

The closure is expected to increase West Canada Select (WCS) heavy oil discounts to US crude from Alberta. This is already high as demand for heavy and sour Canadian fuel oil is sluggish.

WCS for December delivery traded below WTI at $33.50 a barrel, according to one broker.

“If this outage is prolonged, it’s really a worst-case scenario,” said Rory Johnston, founder of the energy newsletter Commodity Context, and if prices drop further, shippers will choose to move crude by rail. said that it is possible to

Additionally, Gulf Coast heavy grades and Latin American grades could see a surge in prices, analysts say.

Steel City is a rough junction where Keystone splits, with one segment transporting crude oil to refineries in Illinois and the other segment transporting oil south to Oklahoma and the Gulf Coast.

If the spill is south of the junction, TC could be able to quickly resume its segment to Illinois, RBC analyst Robert Kwan said in a note.

Kwan said past closures have generally lasted about two weeks, but could last longer due to the bodies of water involved.