Shippers Seek Alternatives as Crews Work to Plug Keystone Leak

WINNIPEG/HOUSTON (Reuters) — Cleanup crews in Walsh County, North Dakota, are working to plug the Keystone pipeline after a 9,000-barrel oil leak this week, a state official said Friday, while crude shippers are searching for alternative means of getting needed supply. 

Workers from TC Energy removing surface oil (Photo: TC Energy)

The shutdown threatens to cut off a large amount of regular supply of heavy Canadian crude to the United States. Canada is the biggest foreign provider of oil to the United States, with exports to the U.S. averaging about 3.6 million barrels per day (bpd) in 2018, according to the federal Canada Energy Regulator.

The 590,000-barrel bpd Keystone system, owned by TC Energy Corp, is a key artery for Canadian heavy crude, imported by United States for blending with other oils to be refined into gasoline, diesel and other fuels.

"When something like (a shutdown) happens, it's all hands on deck for what you do to keep barrels flowing," Chief Executive Rich Kruger of Exxon-owned Imperial Oil said, on a quarterly conference call on Friday. "Not knowing what the situation is, how long it may be offline."

Imperial, which owns contracted space on Keystone, is looking into shipping alternatives for the short and long term, Kruger said.

TC Energy was not immediately available for comment.

Keystone's closure has forced TC Energy's Marketlink pipeline from the Cushing, Oklahoma storage hub to Nederland, Texas, to reduce rates.

About 60 percent of Canada's U.S. exports go to the Midwest. Some refineries in that region, including facilities owned by Phillips 66, Marathon Petroleum Corp and PBF Energy Inc, will feel the pinch, shifting purchases from a major regional oil terminal in Patoka, Illinois, which receives from Keystone and sends outbound flows to Indiana, Ohio and Kentucky, market sources said.

"The large Ohio refiners and east will suffer on both heavy and light deliveries," one U.S. trader said. "Any heavy inventory sitting at Cushing will drain."

Phillips 66's 314,000-bpd Wood River facility in Roxana, Illinois, jointly owned with Cenovus Energy through the WRB Refining partnership, will be affected by lowered supplies, traders said. Phillips 66 said it does not comment on day-to-day supply issues.

Marathon declined to comment, while PBF did not immediately respond to requests for comment.

The cause of the leak is unknown. The spill, first detected by TC Energy on Tuesday night, occurred near a TC Energy pumping station, and saturated an area about half the size of a football field, the company and state officials said.

Related News


{{ error }}
{{ comment.comment.Name }} • {{ comment.timeAgo }}
{{ comment.comment.Text }}