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Dec 13, 2022

Keystone partial restart delayed by bad weather, pollution risk

TC Energy could face additional liability on this spill: Energy law professor

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TC Energy’s efforts to restart a segment of its Keystone oil pipeline after a 14,000-barrel spill have been delayed by bad weather, according to people familiar with the matter.

The company initially expected to begin a partial restart Dec. 10, said the people, who asked not to be identified discussing confidential matters. In addition to the bad weather, the rupture’s proximity to a waterway raises the risk of contamination, which is hampering efforts. TC is still aiming for a full restart on Dec. 20, said the people.

Keystone, which delivers up to 600,000 barrels a day of heavy Canadian crude into the U.S. Midwest, was shut Wednesday night after a spill that is poised to be the largest in the pipeline’s history, and one of the worst in the U.S. since 2010. Including the latest rupture, Keystone has leaked almost 26,000 barrels of crude since it was built 12 years ago, the most of any US pipeline during that timeframe, PHMSA data show.

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TC Energy can’t resume operations on the ruptured segment until federal regulators approve its restart plan. As of Monday, the company had not submitted one, said the Pipeline and Hazardous Materials Safety Administration. If the line resumes service as planned by Dec. 20, this would be one of the longest outages in the pipeline’s history.

Still, news of the restart timeline offered a bearish signal in an otherwise bullish oil market Tuesday. U.S. benchmark futures pared gains, while West Texas Intermediate’s prompt spread — the price difference between oil for January and February delivery — flipped back into a market structure that signals ample supply after earlier indicating scarcity.

So far, the shutdown has limited supplies of Canadian crude to the U.S. Gulf Coast. The Marketlink pipeline, which transport supplies from Keystone to the Gulf, has already informed customers about cuts in flows for December and January, according to people familiar with the matter.

TC didn’t immediately return request for comment.

The spill hasn’t contaminated any drinking water wells, according to the Environmental Protection Agency. Although the pipeline has spewed oil into Mill Creek, which connects to the Little Blue River, the latter wasn’t impacted because of containment efforts, said Kellen Ashford, the agency spokesperson for region 7.

So far, fewer than 2,600 barrels of oil have been recovered — including 2,163 barrels of an oil-water mixture from Mill Creek and 435 of crude directly from the pipeline, the EPA said in a statement. Currently, there is no timeline for clean-up to be completed.