TransCanada shuts Keystone line due to new leak

Tue May 31, 2011 1:15pm EDT
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By Scott Haggett

CALGARY, Alberta (Reuters) - TransCanada Corp cannot yet say when it will restart its 591,000 barrel per day Keystone oil pipeline as its second spill in less than a month pushed oil prices higher, while other lines carrying Canadian oil to the United States were also closed.

The company said on Tuesday the line was shut on Sunday after a half-inch fitting failed at its Severance pumping station in Kansas. The fitting leaked less than 10 barrels (420 gallons) of oil, said company spokesman Terry Cunha, down from an earlier estimate of a 40-barrel spill.

"It's all contained within our pumping station," he said. "It's all been cleaned up and the fitting's been replaced, and we hope to have the system up and running as soon as possible."

Canada is the largest supplier of oil to the United States, shipping about 2 million barrels a day, but the pipelines that deliver that crude have been subject to leaks, spills and shutdowns.

Indeed, Enbridge Inc, whose lines carry the bulk of Canada's crude exports, said storm-related power outages on the weekend shut down a number of its oil pipelines in the U.S. upper Midwest [ID:nN31299604]. The system is expected to return to normal operations later on Tuesday.

Keystone which runs from Hardisty, Alberta, to Cushing, Oklahoma, is a key feed for the Cushing oil storage hub, the pricing point for the New York Mercantile Exchange's benchmark crude contract.

U.S. crude prices rallied on news of the outage, rising at one stage by almost $3 a barrel to a high of $103.39 on Tuesday, climbing faster than London-based benchmark Brent. By 12:40 p.m. EDT, prices had pulled back on weaker U.S. economic data, but were still up by around $1.40 a barrel.

Differentials for West Texas Sour crude moved up about 25 cents on the news of the pipeline shutdown, traders said, with bids holding $2.25 under benchmark West Texas Intermediate and offers up 10 cents to $2.15 under.   Continued...