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Oil Still Stuck at $40

Oil Still Stuck at $40

Renewed lockdown fears sent oil…

Key Canadian Oil Pipeline Finally Back Online

The Keystone oil pipeline has resumed operation after a temporary shutdown following a spill of about 9,000 barrels in North Dakota, operator TC Energy has said.

The restart followed the approval of TC Energy’s repair-and-restart plan, requested by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA), which ordered the shutdown of the pipeline.

Initially, TC Energy said Keystone will operate at reduced pressure, which will then be increased gradually until it reached its normal operating conditions. The cause of the spill has not been established yet.

This is the second shutdown of the 590,000-bpd pipeline that transports Albertan crude to the United States in less than a month. In mid-October, TC Energy itself shut down the pipeline declaring force majeure after severe snowstorms in Manitoba.

The $5.2-billion Keystone pipeline, which began operating in 2010, is one of the few vital outlets for Canadian crude. Any disruption to its operation is bound to affect prices sharply due to the lack of alternative outlets. Unfortunately for the industry, there were several spills from the pipeline over the last ten years, as noted in the PHMSA order, which will strengthen the anti-pipeline arguments of various groups.

Related: Why 2020 Could Be A Crisis Year For Refiners

The system that Keystone is part of is also planned to include the highly controversial Keystone XL pipeline, estimated to cost some $8 billion and repeatedly blocked by various U.S. authorities, notably including the veto of President Barack Obama a few years ago.

While Keystone XL is now back on the table, challenges persist. Last year, a federal judge blocked work on the project, but the government has appealed that ruling but has in the meantime completed a new environmental assessment of the project as per the ruling. With the latest Keystone spill, however, opposition against the other pipeline has grown, further compromising its chances of ever being built.

By Irina Slav for Oilprice.com

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