TC Energy restarts Keystone oil pipeline at 20% pressure reduction: U.S. regulator

NEW YORK (Reuters) - TC Energy Corp has completed repairs and restarted the Keystone oil pipeline at a 20% pressure reduction after spilling more than 9,000 barrels in North Dakota two weeks ago, a U.S. regulator said on Tuesday.

FILE PHOTO: Oil spilled from a section of the Keystone pipeline is seen in Walsh County, North Dakota, U.S., October 30, 2019. Taylor DeVries/North Dakota Department of Environmental Quality/Handout via REUTERS

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) continues to investigate the cause of the rupture in Edinburg, North Dakota, spokesman Darius Kirkwood wrote in an email. He said the failed portion of the line has been shipped to a metallurgical lab in Houston, Texas, for testing.

A TC Energy spokesman said the pressure restriction will remain in effect until all the elements of the integrity verification plan have been completed and approved by PHMSA.

The 590,000 barrel-per-day Keystone system is an important artery for Canadian heavy crude, imported by U.S. refiners, particularly in the Midwest.

The line was shut in late October after a drop in pressure was detected and the outage initially sent the discount on Canadian heavy crude versus U.S. benchmark West Texas Intermediate (WTI) crude to a 11-month high at about $22 a barrel.

On Tuesday, Western Canada Select (WCS) heavy blend crude for December delivery in Hardisty, Alberta, was trading at $19 per barrel below WTI, according to Net Energy Exchange, narrower than Friday’s level of about $21.40.

“PHMSA may approve of the modification or removal of the pressure restriction when the operator demonstrates that such an increase is safe after taking into consideration all known defects, anomalies, and operating parameters of the line,” Kirkwood said.

The line is currently flowing near normal rates as TC Energy is using Drag Reducing Agents (DRAs) in the sections before and after the damaged portion of the line as well as the replaced section of pipe, shippers said.

It was not immediately clear whether the use of DRAs was approved by PHMSA. A TC Energy spokesman declined to comment on exact flow rates and volumes.

The Keystone pipeline has been transporting oil from Canada to the United States at a higher-than-standard level of pressure since it started operating in 2010, thanks to a special permit granted by PHMSA on the condition TC Energy would monitor the line closely.

However, after four significant leaks the exemption is in the spotlight and users of the line are concerned it may be at risk.

Reporting by Devika Krishna Kumar in New York; Editing by Tom Brown and Grant McCool