TransCanada shuts Keystone pipeline, firms oil price

Thu Oct 18, 2012 5:18pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - TransCanada Corp (TRP.TO: Quote) said on Thursday it has shut down its major pipeline for moving Canadian crude oil from Alberta to the central United States after detecting a "small anomaly" on the pipe, lifting benchmark oil prices well off the day's lows.

TransCanada, the country's largest pipeline company, said the 590,000-barrel-a-day Keystone pipeline is expected to be shut for three days as crews investigate the pipe, causing some Canadian crude supplies to back up.

The pipeline has the capacity to transport a quarter of Canada's crude oil exports to the United States, so outages can have big impacts on markets on both sides of the border.

The company said the potential defect was discovered on Wednesday by an in-line inspection tool, known as a "pig", and no leaks were found. It declined to give the location of the anomaly, citing security reasons.

"Once re-start happens we expect normal operations and flows for the remainder of October," TransCanada spokesman James Millar said. "We may have to make up some volumes in November but we are still evaluating this."

The U.S. Department of Transportation's pipeline safety office said it deployed an inspector to review test results and observe repairs on a section of the pipeline between Missouri and Illinois.

The Pipeline and Hazardous Materials Safety Administration has taken a tougher stance on pipeline companies after recent high profile leaks including an Enbridge Inc (ENB.TO: Quote) spill of 20,000 barrels of oil into Michigan's Kalamazoo River in 2010.

West Texas Intermediate crude, which was down $1.18 a barrel early in the session, pared losses following a Reuters confirmation of a report by market surveillance firm Genscape, and even climbed into positive territory for awhile. WTI ended down 2 cents at $92.10 a barrel.   Continued...