TC Energy returns Keystone crude pipeline to full service

TC Energy has returned to full service its Keystone Pipeline System with a controlled restart of the Cushing, Oklahoma extension and crude is being made available to all delivery points in the US Midwest and the Gulf Coast, the operator said Dec. 29.

"After completing repairs, inspections and testing we proceeded with a controlled restart of the Cushing Extension," it said in an update, noting the extension will operate under plans approved by the US Pipeline and Hazardous Materials Safety Administration (PHMSA).

There will be crude flows with additional risk-mitigation measures, including reduced operating pressures on the pipeline system, the update said.

"We maintain our commitment to ongoing safety-led response and will fully remediate the incident site. We will share the learnings from the investigation as they become available," TC Energy said.

The Keystone pipeline system was shut Dec. 7 after an incident in the pipeline resulted in some 14,000 barrels of crude being leaked into a creek near Washington, Kansas.

On Dec. 14, TC Energy restarted the section of the shuttered Keystone pipeline that runs from Hardistry, Alberta to Wood River/Patoka, Illinois. On Dec. 23, TC Energy received approval from PHMSA to resume crude shipments on the Cushing Extension.

The 2,700-mile Keystone Pipeline System ships crude from western Canadian to refineries in the US Midwest and the Gulf Coast.

The Canadian portion of the line runs from Hardisty, Alberta to North Dakota and through to Steele City, Nebraska, where it splits into two sections. The first runs through Missouri for deliveries to refineries into Wood River and Patoka in Illinois and the other heads south through Oklahoma to Cushing and to Port Arthur and Houston, Texas. The second section of the pipeline system is called Marketlink, while the Port Neches Link is planned to connect the Keystone pipeline to its main crude delivery station in Nederland, Texas to allow for the delivery of crude to facilities at the Motiva Terminal in Port Neches.

Prime shippers on the Keystone pipeline system include Cenovus, Suncor Energy, ConocoPhillips, Koch, BP and P66.

TC Energy said in early November in its earnings call crude throughput in the Keystone pipeline system had in September reaching a record of 640,000 b/d, compared with its nameplate of 591,000 b/d.

Little change in Canadian crude prices has been seen despite the pipeline outage. Western Canadian Select was assessed by Platts at a $28.84/b discount to Cushing WTI on Dec. 28, down from a $26.45/b discount on Dec. 7, but remaining in a well-worn range. Western Canadian crude differentials held steady Dec. 29 as no new bids, offers or trades were heard for February barrels.

Lawmakers question TC Energy practices

TC Energy is facing questions from lawmakers demanding accountability and assurances on remediation and spill prevention plans.

The US Government Accountability Office last year noted that Keystone's accident history was similar to other crude oil pipelines, but the severity of spills had worsened in recent years. Most of the 22 accidents on the pipeline from 2010 through 2020 released less than 50 barrels of oil, but Keystone leaked 4,515 barrels near Edinburg, North Dakota, in October 2019 and spewed 6,592 barrels near Amherst, South Dakota, in November 2017, both of which forced the line to shut for more than 10 days.

Senator Ed Markey, Democrat-Massachusetts, in a Dec. 15 letter to TC Energy President and CEO François Poirier, asked whether a higher stress level was a factor in its three largest spills or had any effect on the ruptures and the amount of oil released during the 2017, 2019 and most recent leaks.

Keystone is authorized to operate at a higher stress level than other hazardous liquids lines through a special permit from PHMSA. As such, Keystone runs with a thinner steel pipe at higher stresses, a move that TC Energy contended would cut steel costs by 10%.

Markey suggested that the higher operating stress level could be a contributing factor to the pipeline's numerous ruptures as it "could accelerate a pipeline's failure, precipitating a spill before completion of scheduled in-line inspections."

Markey requested that responses to those questions, and others, should be sent by Jan. 4.