TC Energy Says a Combination of Factors Caused Keystone Oil Spill

TC Energy Corp (TRP.TO) said on Thursday a combination of factors including bending stress on the pipe and a weld flaw might have led to the Keystone oil spill and that it was expecting $480 million in costs related to the incident.

The 622,000-barrel-per-day (bpd) pipeline was shut on Dec. 7 after it spilled 12,937 barrels of oil in rural Kansas.

The pipeline regulator's investigation into the leak is continuing and it will release its own analysis of what caused the spill, according to a person familiar with the matter.

The earlier estimate of the spill was a maximum of 14,000 barrels. The revised volume is the actual measured volume of crude oil injected during the refill of the pipeline system during its restart.

The U.S. Environmental Protection Agency, based on its independent calculation, "continues to work from this initial estimated discharge volume" of 14,000 barrels, a spokesperson said.

The spill, among the biggest in recent years, had hampered deliveries of Canadian crude both to the U.S. storage hub in Cushing, Oklahoma and to the Gulf, where it is processed by refiners or exported.

The pipeline resumed service in late December.

Although welding inspection and testing were conducted, TC said on Thursday that the weld flaw led to a crack that propagated over time, eventually leading to an instantaneous rupture.

"A bad weld from a fabrication facility is troubling - it adds to the list of manufacturing and construction issues that have plagued this pipeline," said Bill Caram, executive director of Pipeline Safety Trust, a U.S. advocacy group against pipeline hazards.

As for the bending stress, the company added that the cause remains under investigation as part of the broader third-party root cause failure analysis.

Land movement likely caused a bad weld to break and bending stress on the pipe, said Caram, adding that Keystone's permit requires it to mitigate such threats.

The Keystone line has been running at a higher rate than other U.S. crude lines since 2017 because of a special permit.

Reporting by Arunima Kumar and Deep Vakil in Bengaluru and Rod Nickel in Winnipeg; Editing by Shounak Dasgupta, Anil D'Silva and Diane Craft