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Keystone Oil Pipeline Partly Shut To Investigate Possible Leak

Pipeline

A part of TransCanada’s Keystone oil pipeline, the crucial route carrying crude oil from Canada’s Alberta province to U.S. refineries, has been shut down for investigation of a possible leak near St. Louis in Missouri, a TransCanada spokesman told Reuters on Thursday.

TransCanada shut down the portion of the 590,000-bpd Keystone pipeline between Steele City, Nebraska and Patoka, Illinois, the company’s spokesman Terry Cunha told Reuters in an email.

TransCanada has sent crews to the site to investigate what’s happening and assess the situation, Cunha said, noting that a portion of the pipeline remained shut on Thursday.

The Missouri Department of Natural Resources plans to find the leak today and the release of oil has stopped, an official with the department told Reuters yesterday.

The shutdown of part of Keystone comes at a time in which Canadian heavy crude is becoming increasingly in demand as refiners look to replace the heavy crude grades from Venezuela after the U.S. slapped sweeping sanctions on the Latin American country’s oil industry and its state oil firm PDVSA.

Yet, the pipeline routes for Canadian oil to the U.S. are full to capacity and rising production in Canada last year led to further takeaway capacity constraints that forced Alberta to mandate an oil production cut of 325,000 bpd for three months starting January 2019. Last week, the Alberta province said it was easing the production cuts in February and March to 3.63 million bpd, which is a 75,000-bpd increase from the January limit of 3.56 million bpd, after seeing that the excessive oil storage has started to clear out.

According to data from Net Energy Exchange quoted by Reuters, the discount of Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands—to WTI widened on Thursday morning to US$10.15 a barrel from US$9.40 a barrel earlier.

In November 2017, TransCanada shut Keystone down for nearly two weeks after the pipeline leaked 5,000 barrels of crude oil in South Dakota.

By Tsvetana Paraskova for Oilprice.com

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