Keystone Pipeline shuts down after oil leak, halting flow of 600,000 barrels a day


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The Keystone pipeline has been shut down after a leak was discovered near the border of Kansas and Nebraska.

The shutdown of a key oil pipeline carrying crude from Canada triggered volatility in the energy market on Thursday, sending oil prices briefly up 5% before retreating.

Federal safety regulators are investigating the leak and are stationed at the site, a spokesperson for the Pipeline and Hazardous Materials Safety Administration told CNN.

Canada’s TC Energy (TRP) said it initiated an emergency shutdown of the Keystone pipeline system at 9 p.m. ET on Wednesday after an alarm was raised and pressure in the system dropped. The company said the system remains shut down as “our crews actively respond and work to contain and recover the oil.”

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Calgary-based TC Energy said there was a “confirmed oil release” in a creek located about 20 miles south of Steele City, Nebraska. The company said an estimated 14,000 barrels of oil had been extracted as of late Thursday.

PHMSA, a branch of the Department of Transportation charged with enforcing safety regulations for pipelines, said the leak is located near Washington, Kansas, which borders Nebraska.

The spokesperson said the agency is probing the cause of the leak.

US oil prices climbed as high as $75.44 a barrel on the news before turning lower. Oil was up 0.8% to $72.57 a barrel in recent trade. The gains follow a massive selloff in recent days that has largely ignored crude since December 2021.

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No timetable has been given for the restarting of the Keystone Pipeline, a 2,700-mile system that delivers mostly Canadian oil to major refineries across the US. The pipeline can transport more than 600,000 barrels of oil per day.

Matt Smith, an analyst at commodities data provider Kepler, said Canadian oil typically carried by Keystone is not easily replaceable.

“We are seeing a pop in prices because it will affect the refiners that take this crude,” Smith said.

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“Our primary focus right now is the health and safety of onsite employees and personnel, the surrounding community, and minimizing risk to the environment through the deployment of the boom downstream,” TC Energy said. in a statement.

The leak occurred on an existing Keystone pipeline that is separate from Keystone XL, a controversial pipeline project that was terminated last year after President Joe Biden revoked the pipeline’s permit on his first day in office.

The Keystone Pipeline has experienced leaks in the past, including one in South Dakota in 2016 and another in North Dakota in 2019 that affected about five acres.

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