Oil Spill Investigation Shutters Major North American Pipeline

The Keystone pipeline was shuttered on Tuesday, TC Energy Corp - formerly TransCanada - said on Wednesday, while it works to investigate a potential oil spill in the state of North Dakota.

The pipeline, which runs from Canada through seven US states bringing tar sands oil to the US, will remain shuttered until the leak has been investigated. Customers have been notified of the disruption.

The Keystone oil pipeline was shuttered in February as well, that time in Missouri.

The pipeline disruption comes on the same day as a hearing in Montana about the environmental review of the $8 billion Keystone XL pipeline—another proposed segment of the Keystone pipeline system. The Keystone XL pipeline is a critical piece of Canada’s oil industry that has struggled with takeaway capacity to bring oil from western Canada to Gulf Coast markets.

The leak will no doubt fuel further opposition to the expansion project, adding to a string of leaks that the pipeline has suffered since 2010, including three major leaks in North Dakota and South Dakota.

The expansion plan has been riddled with delays and work stoppages in response to vehement opposition. Just as vehement, however, is Canada’s oil industry which needs the XL portion of the pipeline.

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The Keystone XL was handed a victory, however, in August, when it received a go-ahead by a Nebraska court which approved the pipeline’s alternate route after the original route was opposed. The next hurdle that the pipeline was to face was today’s Montana hearing.

Canada has endured low WCS prices as a result of its takeaway capacity shortage, as the benchmark fell against WTI. The drop in price for the Canadian blend eventually led to mandatory production quotas in Canada, but not before the WCS to WTI spread rose to new highs.

By Julianne Geiger for OilPrice.com

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