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TransCanada boosts estimate of oil spilled from Keystone pipeline

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Essential Energy Insights - February 2021

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TransCanada boosts estimate of oil spilled from Keystone pipeline

TransCanadaCorp. said an accident on its Keystone pipeline in South Dakotaspilled about 400 barrels of oil sands crude, exceeding an initial estimate ofabout 187 gallons, or approximately 4.5 barrels.

"We have completed our initial modeling and haveprovided to regulators an estimate of the potential volume of 400 barrels,"TransCanada spokesman Mark Cooper said in an April 7 email. "The volumeestimate reported this morning to the National Response Center and the Pipelineand Hazardous Materials [Safety] Administration was based on the safeexcavation of soil to expose more than 100 feet of pipe. It takes into accounta number of factors, including oil observed in the soil and the potential areaimpacted."

The Calgary, Alberta-based company said about 100 people areworking full-time atthe site near Freeman, South Dakota, in the southeast corner of the state. Theincident, which started with a landowner report April 2, is being controlledand no significant environmental impact has been observed, Cooper said.TransCanada is in frequent contact with impacted landowners and regulators tomake sure they are aware of the company's progress.

The company originally expected the line, which is capableof carrying 590,000 bbl/d of oil sands crude from Canada to the U.S. Midwest,would be returned to service by April 8. Reuters reported the restart had beenpushed back to April 12, citing information from traders.

The disruption chokes a crucial outlet for Canada's oilsands producers who ship their product to specialized refineries in theMidwest. Oil sands-derived Western Canada Select traded at a discount ofC$19.68/bbl to benchmark West Texas Intermediate April 7, compared with ayear-to-date average of C$18.45/bbl, according to the Petroleum ServicesAssociation of Canada.

The incident was first reported at approximately 12:30 p.m.CT on April 2. TransCanada said it immediately began the process to shut downthe pipeline, activated its emergency response procedures and dispatched groundcrews to the area. Members of PHMSA are at the site and monitoring itsprogress, Cooper said.

The Keystone network, which would have includedthe failed C$8 billion Keystone XL line, links a terminal inHardisty, Alberta, to refineries in Illinois and storage facilities in Cushing,Okla. A southern leg can carry as much as 700,000 bbl/d from Cushing to theHouston area. The U.S. Department of State in 2015 denied a needed permit for KeystoneXL, which would have carried oil sands crude across a more direct route andboosted the network's capacity.