Dec 9 (Reuters) – Efforts to remove oil from the biggest U.S. crude spill in nearly a decade will stretch into next week, the U.S. Environmental Protection Agency said on Friday, making it likely that the shutdown of the Keystone pipeline will last for several more days.
TC Energy ( TRP.TO ) shut down the largest oil pipeline to the United States from Canada on Wednesday after it leaked 1[ads1]4,000 barrels of oil into a stream in Kansas. It said on Friday it was still determining when it would be able to return the line to service.
The outage at Keystone, which carries 622,000 barrels per day (bpd) of Canadian crude oil to various parts of the United States, could affect storage at the key depot in Cushing, Oklahoma, and cut crude supplies to two oil refineries, analysts said. . Crews in Kansas continued Friday cleanup efforts from the breach, the cause of which remained unknown.
“We’re starting to get a better sense of the cleanup work that needs to be done in the longer term,” said Kellen Ashford, spokesman for EPA Region 7, which includes Kansas.
TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois and another section that brings oil to Cushing on Dec. 20, Bloomberg News reported, citing sources. Reuters has not confirmed these details.
This is the third spill of several thousand barrels of oil on the pipeline since it first opened in 2010. A previous Keystone spill had caused the pipeline to remain closed for about two weeks.
TC Energy remained on site with about 100 workers leading cleanup and containment efforts, and the EPA provided oversight and monitoring, Ashford said. TC is responsible for determining the cause of the leak.
A corrective action order from the US Pipeline and Hazardous Materials Administration (PHMSA) to TC on Thursday said the company shut down the pipeline seven minutes after receiving a leak detection alarm. The affected segment, 36 inches (91 cm) in diameter, was Keystone’s Phase 2 expansion to Cushing built in 2011.
Washington County, a rural area of about 5,500 people, is located approximately 200 miles (320 km) northwest of Kansas City.
The oil spill has not threatened the local water supply or forced local residents to evacuate, Washington County Emergency Management Coordinator Randy Hubbard told Reuters. Workers quickly set up a containment area to prevent oil that had spilled into a creek from flowing downstream.
“There is no potable water that can come out of this,” Hubbard said.
Livestock producers in the area have been notified and have taken their own corrective measures to protect their animals, he added.
The EPA is the main federal agency that oversees domestic oil spills. If the EPA finds TC Energy responsible for the spill, the company will be responsible for the costs of cleanup and repair of damage to the environment, as well as potential civil and criminal penalties.
Pipeline operators are typically held liable for violations by the EPA through the Clean Water Act (CWA) and the related Oil Pollution Act, among others, according to Zygmunt Plater, an environmental law professor at Boston College Law School.
These federal actions limit the discharge of pollutants such as oil into waterways and hold pipeline operators responsible for the costs associated with containment, cleanup and damage from spills.
RAW BOTTLE NECK
A prolonged shutdown of the pipeline could also cause Canadian crude to become bottlenecked in Alberta and cause prices of Hardisty storage to drop, although the price reaction on Friday was muted.
Western Canada Select (WCS), the benchmark for Canadian heavy grades, for December delivery last traded at a discount of $27.70 a barrel to the benchmark U.S. crude oil futures, according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 below U.S. crude, before settling around a $28.45 discount.
PHMSA must approve the restart of the line. Even when the pipeline begins operating again, the affected area will have to flow at reduced rates pending PHMSA approval.
“The real impact could come if Keystone faces pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at Wood Mackenzie.
Additional reporting by Arathy Somasekhar, Rod Nickel, Stephanie Kelly and Clark Mindock; Editing by Marguerita Choy
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