Oil Leak Forces Closure of Vital Keystone Canada-U.S. Pipeline

(AP Photo/Nati Harnik, File)

Canada’s TC Energy has temporarily shut down the 622,000 barrel-per-day Keystone pipeline after a leak was discovered in Kansas Wednesday night and an undetermined amount of oil leaked into a nearby creek. If you’re confused about how the Keystone could spring a leak when President Joe Biden infamously canceled it on his first day in office, here’s your explanation: Biden killed the Keystone XL; this part of the line has been in operation since 2010, and is the primary line shipping heavy Canadian crude from Alberta to the U.S. Midwest and Gulf Coast.

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The company did not say what caused the leak or how much oil was spilled, but did release a statement:

Our primary focus right now is the health and safety of onsite staff and personnel, the surrounding community, and mitigating risk to the environment through the deployment of booms downstream as we work to contain and prevent further migration of the release.

The price of oil rose briefly, but ended the day lower for the fifth time in a row, meaning the closure does not seem to have had a dramatic effect on the market thus far. Traders “shrugged off” the news, according to Reuters, and focused instead “on concerns that global economic slowdowns would slash fuel demand.” In addition, inventory levels are thought to be high enough to withstand a short closure of the Keystone:

Oil prices rose after the company announced the closure, but the rally dissipated as analysts noted that the U.S. Gulf is likely to have enough inventory to handle short-term outages. Several analysts also said the section of the line that goes to Midwest refiners could be restarted soon. TC Energy has not announced when the pipeline would reopen.

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The leak occurred 20 miles south of Steele City, Nebraska in rural Kansas. The 2,687-mile pipeline system has transported more than 3 billion barrels of crude oil from Canada to the United States since its opening twelve years ago. The Environmental Protection Agency and the Kansas Department of Health and Environment are investigating the incident, the pipe’s seventh leak. Past incidents have taken up to two weeks to fix.

Time will tell if this is a serious threat to oil supplies and yet another damper on economic activity. Meanwhile, crews are working overtime to get the line back in operation:

Expect the anti-fossil fuel crowd and the environmentalists to use this incident to call for more reductions in oil use. Massachusetts Democrat Senator Ed Markey wants answers:

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All industries have accidents; oil production is no exception. The goal here should be to get it fixed as quickly as possible, learn from whatever caused the leak, and use the knowledge to improve safety in the future.

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