The Globe and Mail - 13.11.2019

WEDNESDAY,NOVEMBER13,2019 | THEGLOBEANDMAILO REPORTONBUSINESS| B5

TC Energy Corp.has completed
repairs and restarted the Keys-
tone oil pipeline at a 20-per-cent
pressure reduction after spilling
more than 9,000 barrels in North
Dakota two weeks ago, a U.S. regu-
lator said on Tuesday.
The U.S. Pipeline and Hazard-
ous Materials Safety Administra-
tion (PHMSA) continues to inves-
tigate the cause of the rupture in
Edinburg, N.D., spokesman Dari-
us Kirkwood wrote in an e-mail.
He said the failed portion of the
line has been shipped to a metal-
lurgical lab in Houston for testing.
A TC Energy spokesman said
the pressure restriction will re-
main in effect until all the ele-
ments of the integrity verification
plan have been completed and

approved by PHMSA.

The 590,000 barrel-a-day Keys-

tone system is an important ar-

tery for Canadian heavy crude,

imported by U.S. refiners, particu-

larly in the Midwest.

The line was shut in late Octo-

ber after a drop in pressure was

detected and the outage initially

sent the discount on Canadian

heavy crude versus U.S. bench-

mark West Texas Intermediate

crude to a 11-month high at about

US$22 a barrel.

“PHMSA may approve of the

modification or removal of the

pressure restriction when the op-

erator demonstrates that such an

increase is safe after taking into

consideration all known defects,

anomalies and operating param-

eters of the line,” Mr. Kirkwood

said.

The line is currently flowing

near normal rates as TC Energy is

using Drag Reducing Agents

(DRAs) in the sections before and

after the damaged portion of the

line, as well as the replaced sec-

tion of pipe, shippers said.

It was not immediately clear

whether the use of DRAs was ap-

proved by PHMSA.

The Keystone pipeline has

been transporting oil from Cana-

da to the United States at a higher-

than-standard level of pressure

since it started operating in 2010,

because of a special permit grant-

ed by PHMSA on the condition TC

Energy would monitor the line

closely. However, after four signif-

icant leaks the exemption is in the

spotlight and users of the line are

concerned it may be at risk.

REUTERS

TCENERGY(TRP)

CLOSE:$67.77,UP$1.10

OilspilledbytheKeystonepipelineisseenlastFridayinWalshCounty,N.D.Thesystemisavitalarteryfor
Canada’sheavycrude,importedbyU.S.refiners,particularlyintheMidwest.DRONEBASE/REUTERS

TCEnergyrestartsKeystoneat

lowerpressure,regulatorsays

DEVIKAKRISHNAKUMAR
NEWYORK

Imperial Oil Ltd.is increasing shipments of Canadian crude

by rail after the recent Keystone pipeline outage created

more favourable economics, but is not looking to take on

Albertagovernment contracts tomove evenmore oil on

trains, chief executive Rich Kruger said on Tuesday.

The shutdown last month of the leaking Keystone oil pipe-

line, which moves Alberta oil to U.S. refineries, increased the

discount on Canadian heavy crude against U.S. light oil to

reflect the steeper challenges moving it. That widening price

gap made Canadian oil more attractive to the U.S. refiners

who buy it, spurring additional movements on rail.

“We have been scurrying to increase rail shipments,” Mr.

Kruger told reporters on a conference call after Imperial’s an-

nual investor day in Toronto. He declined to estimate the vol-

ume of the increase. “It’s safe to say our fourth-quarter rail

shipments will be higher than I thought they would have

been a few short weeks ago.”

Keystone resumed operation at partial pressure on Sun-

day, and the discount on Canadian crude shrunk on Tuesday

to around $19 a barrel from as much as $23 last week, which

was an 11-month high.

Congested pipelines forced the

previous Alberta government

this year to order production

curtailments to support prices,

and it also struck leases to move

more crude by rail.

The new United Conservative

Party government, elected in

April, has maintained curtail-

ments but plans to divest the rail

leases, which amount to 120,000

barrels a day of capacity.

Exxon Mobil Corp.-owned

Imperial, which operates Alber-

ta’s biggest crude-loading termi-

nal, is “not in the hunt” for new rail investments as the gov-

ernment curtailments create uncertainty, Mr. Kruger said.

Rival Canadian Natural Resources Ltd said last week that

Alberta’s rail leases were complex and it may take awhile for

private operators to take them over.

A spokeswoman for Alberta Energy Minister Sonya Savage

said the contracts are indeed “highly complex.”

“The government is looking to divest them as soon as pos-

sible, but at the best deal for Albertans,” spokeswoman An-

drea Smotra said.

Imperial would be interested in allowing other shippers

who take on thegovernment rail leases to access its terminal,

Mr. Kruger said.

REUTERS

IMPERIALOIL(IMO)

CLOSE:$34.24,DOWN$1.18

ImperialOilrampingup

crudebyrail,butnot

pursuingAlbertaleases

RODNICKEL

It’ssafetosayour

fourth-quarterrail

shipmentswill

behigherthanI

thoughttheywould

havebeenafew

shortweeksago.

RICHKRUGER

IMPERIALOILCEO