The Keystone Pipeline declared force majeure on scheduled oil shipments after a leak spilled an estimated 3,500 barrels of crude in a North Dakota field.
Keystone warned customers that it may not be able to meet obligations to send oil through the conduit as far as back as 5 p.m. local time Tuesday, according to a notice from owner South Bow Corp. seen by Bloomberg. The company said it has already started planning for repairs as it evaluates a timeline for restart.
Digging near the site of the spill will commence as soon as late Wednesday to determine the precise location of the leak, a state official said.
The pipe system hauls more than 620,000 barrels of crude daily from Canada to U.S. markets. It shut down early Tuesday after crude was released in a remote area of North Dakota.
Workers are putting down a land bridge so that heavy equipment can move to the site, Marty Haroldson of the North Dakota Department of Environmental Quality said by phone.
In Alberta, Canadian heavy crude’s discount to the U.S. benchmark West Texas Intermediate widened as the line remained shut a second day. Western Canadian Select traded at a US$10.25-a-barrel discount versus $10.10 on Tuesday, according to a person familiar with prices.
On the U.S. Gulf Coast, prices of Western Canada Select strengthened amid uncertainty over the supply of oil to the region. The discount narrowed to $2.70 from $2.85 on Tuesday, according to data compiled by Bloomberg.
A prolonged Keystone outage could also raise retail gasoline and diesel prices, especially in the Midwest, where refiners rely on Canadian crudes. Gasoline inventories in the region have been declining for the last four weeks and are at the lowest since late January, according to U.S. Energy Information Administration data released Wednesday.
Diesel stocks in the Midwest have been declining for six weeks and are at the lowest level since December.
Nathan Risser, Robert Tuttle and Lucia Kassai, Bloomberg News
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