Oil spill in rural Kansas creek shuts down Keystone pipeline

TOPEKA, Kan. (AP) — An oil spill in a creek in northeastern Kansas shut down a major pipeline that carries oil from Canada to the Texas Gulf Coast, briefly causing oil prices to rise on Thursday.

Canada-based TC Energy said it shut down its Keystone system Wednesday night following a drop in pipeline pressure. It said oil spilled into a creek in Washington County, Kansas, about 150 miles (241 kilometers) northwest of Kansas City.

The company said in a news release that the pipeline segment where the spill occurred had been "isolated" and that the company was using booms, or barriers, to keep the spilled oil from moving downstream. It didn't say how much oil was spilled or what caused the spill.

Concerns that spills could pollute waterways spurred opposition to plans by TC Energy to build another crude oil pipeline in the Keystone system, the 1,200-mile Keystone XL, which would have cut across Montana, South Dakota and Nebraska. Critics also argued that using crude from western Canada's oil sands would make climate change worse, and President Joe Biden's cancelation of a U.S. permit for the project led the company to pull the plug last year.

In 2019, the Keystone pipeline leaked an estimated 383,000 gallons (1.4 million liters) of oil in eastern North Dakota, damaging about five acres.

There was a brief surge in oil prices midday Thursday as word of the spill in Kansas began to spread, with the cost for a barrel of oil for near-term contracts rising by nearly 5%, and above the cost of oil contracts further into the future. That typically suggests there is anxiety in the market over immediate supply.

"It's something to keep an eye on, but not necessarily an immediate impact for now," said Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks gasoline prices. "It could eventually impact oil supplies to refiners, which could be severe if it lasts more than a few days."

Past Keystone spills have led to outages that lasted about two weeks, but this outage could possibly be longer because it involves a body of water, said analysts at RBC Capital Markets in a note to investors. Depending on the spill's location, it's possible that a portion of the pipeline could restart sooner, they said.

"Much of the oil through Keystone gets exported, so we expect little to no impact on domestic gasoline prices," said Andrew Gross, spokesman for AAA. "Any spike in reaction will likely subside quickly as other news takes over."

Randy Hubbard, the Washington County Emergency Management coordinator, said there had been no evacuations because the break happened in a rural area in the middle of a pasture. He didn't know the name of the creek or what body of water it flows into.

He said the pipeline operator hasn't disclosed how much oil was discharged and that it could take a day and a half to get that data.

He said he hadn't been to the site but is supporting investigators with the U.S. Environmental Protection Agency and and Kansas Department of Health and Environment.

Keystone said in its statement: "Our primary focus right now is the health and safety of onsite staff and personnel, the surrounding community, and mitigating risk to the environment through the deployment of booms downstream as we work to contain and prevent further migration of the release."

The Kansas department's spokesman, Matt Lara, said it was sending a team to the site but had no information. The EPA didn't immediately respond to a request for comment and officials with the Pipeline and Hazardous Materials Safety Administration didn't immediately respond to questions about the oil spill Thursday.

"Everyone is in their fact-finding process," Hubbard said.

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