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U.S. Regulators Keep Keystone Capacity Capped At 80 Percent

TransCanada says U.S. regulators are still requiring the Keystone pipeline to operate at 80 percent capacity after the key vein suffered a 5,000-barrel leak a couple of months ago, according to a new report by Reuters.

Genscape said the pipeline averaged a 524,000-bpd flow rate last week. The reduced supply caused inventories at the Cushing, Oklahoma, site to decline as well, traders said.

The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) did not comment on when Keystone would be allowed to operate at full capacity again. Canada’s oil industry has also been unable to build new pipelines to get the landlocked oil from Alberta to market. Alberta oil producers are essentially hostage to their buyers in the U.S., with oil production now bumping up against a ceiling in terms of pipeline capacity. This is why the outage at the Keystone pipeline has led to a rapid buildup in oil inventories in Canada. Storage hit a record high in December, with Canadian crude oil exports falling 2.4 percent in November.

TransCanada said last week it had secured 500,000 bpd worth of 20-year commitments from shippers willing to use its future Keystone XL pipeline in an upbeat update on the progress of the notoriously controversial project. This amount is about 60 percent of the 830,000-bpd pipeline.

TransCanada has seen share prices surge as the pipeline’s prospects seem rosier, but the company still needs to make a final investment decision on the project, and the oil market is dramatically different than it was a decade ago when the project was initially drawn up.

The existing Keystone pipeline, which would be upgraded to become the Keystone XL pipeline, leaks more often and more oil than TransCanada predicted in communications to regulators and lawmakers during approval hearings, according to an earlier report by Reuters.

By Zainab Calcuttawala for Oilprice.com

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  • Editor of Republican Women's Club on November 05 2018 said:
    This article pointing out the Still remaining restriction of flow to TransCanada's XL pipeline is significant. At the time the South Dakota leak was being reported, TransCanada invested in a $300,000.00 + latest
    Technology super pig to find the problem.....which has to this date Oct. 2018 NOT been found nor corrected ( or flow would be returned to 100%). So a company knowing they cannot operate the entire new KXL Pipeline at 100% is attracting investors to a new pipeline that is planned to be connected to a defective pipeline? This does NOT make economic sense!

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