The crude oil spill on the Keystone pipeline in South Dakota will take months to clean up, a state official said on Friday, just days before Nebraska was due to decide on another pipeline project by the owner, TransCanada Corp.
Canadian heavy crude prices and TransCanada Corp shares slid on Friday, the day after the 5,000 barrel spill, tied for this year’s largest pipeline leak in the United States.
No date has been set for reopening Keystone, TransCanada said, adding that a media report that had stated a restart date was incorrect.
The spill gave further ammunition to environmental groups and other U.S. opponents of another pipeline the company has proposed, the long-delayed Keystone XL.
Keystone carries 590,000 barrels per day (bpd) of crude from Alberta’s oil sands to markets in the United States. The state of Nebraska was set to decide on Monday whether to approve Keystone XL.
On Thursday, Calgary, Alberta-based TransCanada said it had contained the leak in the town of Amherst, South Dakota, and was investigating the cause. It said the pipeline will be shut until it gets approval to restart from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA).
“It’s not a tiny spill by any means,” said Kim McIntosh, environmental scientist manager at the South Dakota Department of Environment and Natural Resources. McIntosh said it may take longer than usual for the company to determine the extent of contamination, a process that usually takes days.
The last Keystone pipeline spill recorded was about 400 barrels of oil in Hutchinson County, South Dakota, in April 2016. “The 2016 release took around 10 months to clean up; this will take longer,” said McIntosh. “I can’t predict whether it will take 20 months or 12 months.”
In Nebraska, Keystone XL opponents seized on the spill as an example of its environmental risks. “Pipelines are basically plumbing; and plumbing leaks. It comes as no surprise,” said Tom Genung, who lives near the proposed Keystone XL route in Holt County, Nebraska.
The Nebraska Public Service Commission, or PSC, is scheduled to announce a decision on Monday on Keystone XL. Its decision focuses narrowly on whether the pipeline is in the public interest, not environmental issues, which it is not allowed to consider.
Art Tanderup’s family farm in Neligh, Nebraska, lies in the path of the 830,000 bpd Keystone XL project. He said he hoped the spill will sway any Nebraska commissioners who may be on the fence about a permit.
“I hope it sends a message to those five people making that decision on Monday,” said Tanderup. He said the proposed XL pipeline would be built over huge swaths of porous, sand-like soil atop the Ogallala aquifer, putting farmers and ranchers at risk of water contamination if a spill occurs.
“We would have so much crud and chemicals in the Ogallala aquifer that we could never clean up,” he said.
TransCanada shares fell 1.2 per cent on the Toronto Stock Exchange to C$62.36 on Friday afternoon.
The South Dakota spill of an estimated 5,000 barrels was tied with January’s spill from the Seaway pipeline near Trenton, Texas, for the largest U.S. crude oil pipeline spill in 2017, U.S. data showed.
Export pipeline shutdowns exert more pressure on the price on Canadian crude because barrels get bottlenecked in Alberta, leading to a glut in storage hubs like Hardisty and Edmonton.
TransCanada spokesman Terry Cunha said the company is assisting with the storage of crude in Hardisty, where Keystone originates, and that it regrets the impact caused to customers.
The discount for Western Canada Select for January delivery in Hardisty, Alberta, widened to $16.00 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers. On Thursday January barrels settled at $15.50 per barrel below the U.S. benchmark.
Trading volumes were thin as Thursday was the last day of the monthly Canadian crude trading window. There was no trade in barrels for December delivery, according to Shorcan.