TransCanada has announced has restarted its Keystone oil pipeline today under reduced pressure, after the Pipeline and Hazardous Materials Safety Administration reviewed the company’s repair and restart plans.
TransCanada had shut the 600,000-bpd pipeline two weeks ago, after it leaked 5,000 barrels of crude into agricultural lands in South Dakota. Following the leak, South Dakota regulators said they might revoke their approval of the Keystone XL oil pipeline project if they find TransCanada was in breach of its license with the Keystone leak.
The South Dakota regulators are worried about the leak since it is the third to occur in a decade, which is too many given the pipeline’s lifespan is 100 years. Yesterday, Reuters reported, after reviewing risk assessment documents submitted by the company to regulators, that the pipeline had leaked more oil than TransCanada had calculated before the pipeline went into operation seven years ago. In these documents, TransCanada had estimated the likelihood of a spill of over 50 barrels of crude at “not more than once every seven to 11 years over the entire length of the pipeline in the United States.”
Keystone transports crude oil from Canada to refineries in Oklahoma and Illinois, and passes through North and South Dakota, Nebraska, Kansas, and Missouri. The Keystone XL is planned to pass through Montana and South Dakota, ending in Nebraska, where it would connect to the existing pipeline network going on to the Gulf Coast.
WTI prices jumped to two-year highs after the leak, hitting US$59 a barrel last Friday, before retreating on the announcement of the pipeline’s restart. However, TransCanada said the pipeline will initially operate at reduced pressure—hence capacity—which should help keep prices high for a while longer.
The time when the leak occurred was unfortunate for TransCanada as it occurred on the Friday before the week when Nebraska regulators were to announce their decision on Keystone XL. Despite this, the watchdogs approved the second pipeline project, although they requested a change of the route.
By Irina Slav for Oilprice.com
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