PHMSA orders lower pressure on Keystone pipeline

The Canadian pipeline operator completed a controlled restart of the 622 000 bpd pipeline to Cushing, Oklahoma, on 29 December 2022, returning it to service after a 21-day outage following the biggest US oil spill in nine years.

The company's "operating, maintenance, and/or integrity management programmes may be inadequate to address the repetitious pattern of failures related to the original design, manufacture, and construction of Keystone pipeline," the Pipeline and Hazardous Materials Safety Administration (PHMSA) said in its order.

The amended corrective action order (ACAO) requires TC Energy to keep the operating pressure on the affected pipeline segment under the previously agreed upon 923 psig limit. TC Energy said it was reviewing the PHMSA order and that it would comply with it.

"The Keystone Pipeline System has been operating under operational mitigations, within the pressure restrictions applied in the PHMSA ACAO, since it was returned to service," the company said in an email statement.

In addition, operating pressure on the rest of the pipeline extension from Steele City, Nebraska to the Cushing storage hub and on the entire 1025 mile main line from the Canadian border to refineries in Illinois, must not exceed 72% of the specified minimum yield strength (SMYS). This effectively amounts to a suspension of the special permit that PHMSA issued to TC Energy in 2007, allowing the pipeline to operate at a stress level of 80% of its SMYS, and the order requires TC Energy to review the pressure restriction monthly.

The pressure reductions will lower crude flow rates on the entire Keystone system, which could affect price differentials between US and Canadian crude, Credit Suisse Analyst, Andrew Kuske said in a note. TC Energy will also be required to submit an independently conducted root cause failure analysis, followed by a remedial work plan and proposed measures to mitigate consequences of a failure, according to the order.

The PHMSA said it issued the order without a hearing considering various factors that include "the increasing severity of spills in recent years" and "the possibility of future failures," while its investigation into the cause of the December spill was ongoing.

The Canadian company said last month that a combination of factors including bending stress on the pipe and a weld flaw might have led to the Keystone oil spill, and it expected US$480 million in costs related to the incident. It revised the discharge volume to 12 937 bbl by measuring the crude injected to refill the pipeline during its restart, while the US Environmental Protection Agency said it continued to work from its independent initial estimate of 14 000 bbl.

Image: REUTERS/Drone Base/File Photo

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