TC Energy shuts down Keystone pipeline system after leak in Kansas
The size and scope of the oil spill caused by the Keystone pipeline Wednesday remains unknown, but analysts say Canadian crude could suffer a significant price impact if the pipeline is shut down for more than a few days.
Pipeline operator TC Energy Corp. said Wednesday evening that it had mobilized people and equipment in response to a confirmed release of oil into a creek in Washington County, Kan., about 32 kilometres south of Steele City, Neb.
The system remained shut down Thursday morning, as crews respond and work to contain and recover the oil that was spilled.
TC Energy has not indicated how much oil was spilled, or how long the pipeline system is expected to be down.
h ceeIt said the affected segment of the pipeline has been isolated and booms have been deployed to prevent the leaked oil from moving downstream.
But analysts say any prolonged shutdown would be problematic, because oil from Western Canada has already been trading at a significant discount to global prices so far this season.
On Thursday, for example, the differential between Western Canada Select and the U.S. benchmark West Texas Intermediate was about US$29 per barrel (a US$15 spread is more typical).
The difference in price in 2022 between U.S. and Canadian oil has not been because of a lack of pipeline access but more due to a series of refinery outages in the U.S. Midwest, which have lessened the ability for operating refineries to take on excess barrels of Canadian heavy crude.
However, experts say a Keystone shutdown of more than a few days would quickly start to impact transport of Canadian oil both to the U.S. storage hub in Cushing, Okla. and to refiners along the U.S. Gulf Coast. The resulting glut would force Canadian oil producers to begin selling barrels at an increased discount.
“If this lasts a long time, and you begin to have egress constraints again, that starts nudging the differential open,” said Rory Johnston, an oil markets analyst and founder of the Commodity Context newsletter.
“It's not a great situation for Canadian crude shippers, and particularly producers of Canadian heavy oil, at this particular moment.”
The Keystone pipeline system stretches 4,324 kilometres and helps move Canadian and U.S. crude oil to markets around North America.
There have been a handful of spills along the pipeline's route in recent years, the most significant of which were in November 2017 and October 2019.
The 2017 leak saw approximately 6,600 barrels of oil spilled in North Dakota, and the 2019 spill saw approximately 4,500 barrels spilled in South Dakota.
Vijay Muralidharan, energy analyst and managing director with R Cube Consulting Inc., said the 2017 spill in particular was a problem for Canada. In the 10 days that the pipeline was shut down, WTI prices jumped and Canada's WCS fell sharply, taking a bite out of the Canadian energy sector's profits.
However, the 2017 spill also came at a time when Canada had significantly less pipeline space. The addition of Enbridge's Line 3 replacement project, which came online in 2021, has added significant capacity.
Still, he said markets were jittery Thursday.
“Because (traders) don't know how long (Keystone) is going to be shut, it's pretty mild,” Muralidharan said, adding the price of WTI jumped immediately after news of the spill broke but has since settled.
But he said 10 days is about the longest the pipeline can be shut down before a significant market impact.
“If the news gets out that it's going to be shut for longer, you're going to see panic and pandemonium on the markets.”
Johnston said his “base case estimate” is that Keystone could be down for two weeks.
“That said, it's very, very hard to tell early on how much of an issue this is going to be,” Johnston said. “A lot of the leak is sub-surface, the ground is frozen ... It's going to be a little while until we know the full extent.”
Wednesday's spill has also provided ammunition for environmental activists south of the border. In a statement, Catherine Collentine of the Sierra Club referred to a “toxic” spill from the Keystone pipeline and used the negative term “tar sands” to describe Canada's oil producing region of northern Alberta.
“This is not the first time this pipeline has spilled and unfortunately we know all too well that it won't be the last,” Collentine said. “There is no such thing as a safe tar sands pipeline.”
Fears about potential pipeline leaks - as well as concerns about climate change - helped stoke opposition south of the border to TC Energy's proposed Keystone XL project, which would have cut across Montana, South Dakota and Nebraska.
U.S. president Joe Biden cancelled the permit for that project immediately after his inauguration, and TC Energy formally pulled the plug on it in June 2021.
This report by The Canadian Press was first published Dec. 8, 2022.
- With files from The Associated Press
This version has been corrected to indicate the leak occurred in Kansas, not Nebraska.
CTVNews.ca Top Stories
With the anniversary of Ukraine's invasion by Russia around the corner, CTV News sat down with a Russian warfare expert to discuss how he sees the conflict playing out and what happens next.
According to Environment and Climate Change Canada, as of Thursday morning there were extreme cold or winter storm warnings active from coast to coast, with the harshest extreme cold warnings stretching from northern Alberta all the way to Nova Scotia.
Would you pay $300 a year for quick access to a nurse? Dealing with demand, Ontario doctors get creative
Paid subscriptions to on-demand care are among the many strategies primary health-care providers in Ontario are adopting in order to meet increased demand for access to doctors in the past year, while also managing staffing shortages.
Nestle Canada says it is winding down its frozen meals and pizza business in Canada over the next six months. The four brands that will no longer be sold in the freezer aisle at Canadian grocery stores are Delissio, Stouffer's, Lean Cuisine and Life Cuisine.
A paramedic signing off for duty for the last time got choked up and teary-eyed during his final radio call to colleagues.
Hundreds of customers who scan QR codes for restaurant menus across Canada are being surprised by secret menus instead, revealing the hidden costs behind the food they eat.
One of Saskatchewan’s oldest hockey rinks has garnered national attention for its unique features and unusual design.
The U.S. is tracking a suspected Chinese surveillance balloon that has been spotted over U.S. airspace for a couple days, but the Pentagon decided not to shoot it down due to risks of harm for people on the ground, officials said Thursday.
As the most romantic day of the year approaches, Canada's 100 most romantic restaurants for 2023 have been revealed for those who might consider booking a table for Valentine's Day dinner.
If EPS, sheriffs try a hard crackdown on inner-city Edmonton it could make things worse: criminologist
A former Edmonton Police Service officer believes bringing Alberta Sheriffs into downtown Edmonton is a risky plan that has the potential to backfire if not done properly.
The Operation Friendship Seniors Society (OFSS) announced Wednesday that it would be shutting down services at the McCauley Seniors drop-in facility.
Three more Albertans died from influenza in a one-week period, according to the latest data from health officials, while newly reported cases decreased for the 10th week in a row since the peak in mid-November.
A man was found fatally shot in a vehicle on a residential street in Burnaby Thursday afternoon, and homicide investigators have been called to the scene.
Strong winds are expected to arrive Friday afternoon and last until the evening.
Hidden along old logging roads and tucked in near rivers and waterways, are campers who have made Crown land near the Chilliwack River their homes.
On the day that Shubenacadie Sam predicted six more weeks of winter, there are extreme cold warnings cautioning that the coldest air of the season is about to arrive in the Maritimes.
Police in Sackville, N.B., are investigating after seven children ingested cannabis edibles at a middle school on Wednesday.
An extreme cold warning has been issued across the region, with some saying the arctic air could break record-low temperatures in the Maritimes.
Hazmat teams were called to the BC Cancer Agency building in Victoria on Thursday due to reports of a "noxious odour" in the building.
A furry mascot endemic only to Vancouver Island is predicting six more weeks of winter on Groundhog Day.
The tight-knit community of Quadra Island, B.C., is grieving the death of 39-year-old Jessica McLaggan, whose death is being investigated as a homicide.
'We win or it’s free' paralegal bribed court clerk in traffic ticket fixing scheme: testimony alleges
A paralegal firm whose tagline is “we win or it’s free” bribed a Toronto traffic court clerk to change legal records to make it look like they had won, said the clerk in the first time he has testified publicly about the case.
Toronto and most of Ontario are in for a frigid bout of winter weather, according to Environment Canada.
A group of Ontario Greens have put together a counteroffer for Liberals trying to poach their leader.
After an extremely mild month of January, the province is bracing for a blast of arctic air that will move in tonight and last until Saturday. Environment and Climate Change Canada has issued extreme cold warnings that covers most of the province with wind chills expected to be between -38 and -42 across the South and -50 across Northern Quebec.
A beloved man who was a fixture on the streets of Montreal's Notre-Dame-de-Grace neighbourhood died last year from a combination of street drugs in his system, including fentanyl, a coroner has ruled.
Medicago's parent company has announced that the Quebec City-based biopharmaceutical company, which developed a vaccine against COVID-19, will cease operations.
EXTREME COLD WARNING
EXTREME COLD WARNING | Temperatures to drop to -30 C the next two nights in Ottawa
Environment Canada has issued an extreme cold warning with Ottawa expected to see its coldest temperatures in years.
Two parents are facing charges of criminal negligence causing bodily harm after a toddler suffered an opioid overdose at a home in Kingston, Ont. last week.
As March Break approaches, travel agents are experiencing a surge in bookings, with many families choosing to travel to Disney World in Florida despite the rising cost.
Police say they’ve arrested multiple people and one person was taken to hospital following reports of an armed robbery at Conestoga Mall on Thursday.
'Time to move on': Reaction as Udo Haan found not criminally responsible for wife’s death, house explosion
A Kitchener man, who was charged with killing his wife and then blowing up their home in 2018, has been found not criminally responsible.
A blast of cold Arctic air is expected to reach southern Ontario Thursday night paired with possible heavy blowing snow, according to Environment Canada.
Aaron Benneweis, 46, has been charged by Saskatoon Police with sexual assault and sexual exploitation of a minor while in a position of trust or authority.
Brian Hodgkinson always knew there was benzene in natural gas — after all, he spent 40 years working with it for SaskPower, then SaskEnergy.
A report written and reviewed by Saskatoon Water is calling on the city to create a warning system, in particular for drivers, when roadways become “dangerously flooded” due to heavy rain.
An argument between two young children playing outside together escalated to violence when a parent got involved, a North Bay mom says.
The Ontario Lottery and Gaming Corp. is holding a big reveal Friday morning: the winner of a $48 million Lotto 6/49 Gold Ball draw.
The past few weeks have been a bit of a roller coaster for 16-year-old Ra'Jah Mohamed, a student at Lo-Ellen Park Secondary School.
New documents show what led to a couple handing out cannabis-infused gummies to children in Winnipeg - and what happened in the hours directly after.
Ducks Unlimited Canada is celebrating World Wetlands Day by highlighting a success story in Niverville, Man.
A mobile home owner could potentially be out thousands of dollars after learning her home might not be insurable.
One of Saskatchewan’s oldest hockey rinks has garnered national attention for its unique features and unusual design.
The final details are being chiselled into place at the REAL District in preparation for the second annual Frost Festival taking place Feb. 3 to 12.
The Farmer and Rancher Mental Health (FARMh) Initiative has launched a mental wellness network along with a virtual toolbox full of mental health resources for the agriculture community.