Pipes for the Keystone XL pipeline stacked in a yard near Oyen, Alberta, Canada. (Jason Franson/Bloomberg News)
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The Keystone oil pipeline system, a major conduit linking Canada to the U.S. Gulf Coast, was shut down after crude leaked into a creek in Kansas.
The incident occurred about 20 miles (32 kilometers) south of Steele City, Neb., pipeline owner TC Energy Corp. said Dec. 8 in a statement. U.S. crude futures soared as much as 4.4% on expectations of tighter supplies.
The affected segment has been isolated and crews are working to contain and recover the oil, TC said. The Keystone system can carry more than 600,000 barrels of crude per day.
The spill follows several other leaks to hit Keystone in the past several years. The system was shut down in October 2019 after it spilled thousands of barrels of oil in North Dakota.
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West Texas Intermediate futures rose to more than $75 a barrel in New York trading before paring gains. The nearest time spread for the U.S. benchmark surged as much as 42 cents into a bullish backwardation structure. A prolonged outage would significantly tighten markets in Cushing, Okla., the delivery point of benchmark U.S. crude futures, as well as on the Gulf Coast.
Inventories in Cushing are already at the lowest level since July and at multiyear lows seasonally. With refinery runs in the Midwest at the strongest since August, the market could get very tight while the vital conduit is shut. Traders said they expect the outage will likely last a few days since the leak reached a waterway.
TC didn’t immediately provide an estimate of how much crude leaked or a timeline for a restart.
Nebraska Department of Environment and Energy confirmed that the leak occurred in Kansas and not Nebraska. The Pipeline and Hazardous Materials Safety Administration said it had deployed personnel to the site of a Dec. 7 crude oil leak near Washington, Kan.
“The line has been removed from service and remains shut down,” the agency said. “PHMSA’s investigation of the cause of the leak is ongoing.”
— With assistance from Sheela Tobben and Ari Natter.
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