February 8, 2019 / 5:36 PM / 5 months ago

Keystone pipeline likely source of Missouri crude spill: TransCanada Corp

(Reuters) - An oil leak near St. Louis, Missouri likely originated from TransCanada Corp’s Keystone pipeline, the company said on Friday, with no projected restart timetable for the portion of the line that remains shut.

The leak volume is estimated at 43 barrels of crude oil on land, according to Missouri’s Department of Natural Resources. The spill and subsequent shutdown of portions of Enbridge’s Platte pipeline and the bigger Keystone line raised fresh concerns about pipeline safety, and about the already constricted flow of Canadian oil to U.S. refineries.

Crews were excavating a segment of the underground pipeline on Friday, TransCanada spokesman Terry Cunha said. He said there was no threat to public safety or the environment.

The 590,000 barrels-per-day Keystone pipeline is a critical artery taking Canadian crude from northern Alberta to U.S. refineries. The spill in rural St. Charles County, Missouri, on Wednesday led TransCanada to shut an arm of Keystone running between Steele City, Nebraska, and Patoka, Illinois.

Brian Quinn, a spokesman for Missouri’s Natural Resources Department, said in an email that if Keystone is confirmed to be the leak’s source, it will remain closed until repairs are made.

The exact quantity of oil released cannot be determined until excavation is complete and it’s unclear how long the release lasted, Quinn said.

TransCanada told Keystone shippers on Thursday that it was declaring force majeure on shipments affected by the shutdown, according to a notice seen by Reuters. Force majeure is a declaration that unforeseeable circumstances prevented a party from fulfilling a contract.

Canadian pipelines are congested because of expanding production in recent years, forcing the Alberta provincial government to order production cuts starting last month. Canadian heavy oil has attracted greater demand following U.S. sanctions against Venezuela’s state oil company.

Enbridge Inc said on Friday that it has begun a restart plan for its Platte pipeline and that the line could be fully operational by Saturday.

The leak happened near the Mississippi River, at a spot upstream of the intake for St. Louis’s drinking water supply, said John Hickey, director of the Sierra Club’s Missouri chapter. The immediate concern is that leaked oil could contaminate farm wells, Hickey said.

Keystone runs parallel to Enbridge’s Platte line and feeds refineries owned by BP Plc, Marathon Petroleum Corp and one jointly by Phillips 66 and Cenovus Energy.

Wood River Refinery is undergoing planned maintenance, Phillips 66 spokeswoman Melissa Ory said.

Marathon declined to comment and BP did not respond to a request for comment.

The discount on Canadian heavy crude compared with U.S. light oil grew to as much as $11.50 per barrel on Friday from the previous day’s settlement of $10.25, according to Net Energy Exchange, indicating concerns about oil reaching buyers.

TransCanada and Enbridge shares were down 2 percent and 3 percent respectively in Toronto.

Reporting by Rod Nickel in Winnipeg, Manitoba and Devika Krishna Kumar in New York; editing by Dan Grebler and Grant McCool

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