UPDATE 2-US oks restart of Keystone pipeline to ship Canada oil

Sat Jun 4, 2011 6:52pm EDT

* Line was shut last Sunday after leak in Kansas

* Pipeline can transport 591,000 barrels of oil a day

* Shutdown raised crude oil prices when supply cut off (Adds comment from U.S. pipeline regulator)

By Tom Doggett and Jeffrey Jones

WASHINGTON/CALGARY, June 4 (Reuters) - TransCanada Corp (TRP.TO) can restart its Keystone oil pipeline on Sunday, after the company satisfied a series of safety conditions following leaks that idled the key export line twice in less than a month, the U.S. pipeline safety regulator said on Saturday.

The U.S. Pipeline and Hazardous Materials Safety Administration said it approved resumption of crude flows from Canada on the pipeline after the agency evaluated the company's restart plan and was satisfied safety requirements were met.

PHMSA issued a corrective action order on Friday, demanding the company agree to a series of immediate and long-term measures following an outage last Sunday on the 591,000 barrel-a-day pipeline that runs to the oil pricing hub of Cushing, Oklahoma, from Alberta.

In that incident, 10 barrels spilled due to a faulty fitting at a Kansas pump station.

The outage raised oil prices as it limited oil shipments from Canada, the largest crude supplier to the United States. Canadian cash oil prices weakened as supplies backed up in Alberta.

In early May, Keystone was shut down for nearly a week after a 500-barrel spill at a pump station in North Dakota, which TransCanada blamed on a different piece of equipment.

In its corrective action order, PHMSA revealed a leak in South Dakota on May 25, but said it was below the threshold for reporting it.

With immediate repairs completed, PHMSA had said TransCanada must perform metallurgical testing, analysis of the failures and review other parts of the year-old system.

"Based on a review of the information submitted, the restart plan is approved," PHMSA said a letter to TransCanada on Saturday.

The earliest the company can restart the pipeline is at daylight on Sunday morning, the agency said. TransCanada officials could not immediately be reached for comment about the company's restart plan.

Concerns about safety have come as TransCanada seeks U.S. State Department approval for a controversial $7 billion expansion of the Keystone system, which would carry crude derived from Canada's oil sands as far as the U.S. Gulf Coast.

Environmental groups cited the pipeline leaks and PHMSA's order requiring a safety review as reasons the Obama administration should turn down TransCanada's request to expand the pipeline. (Reporting by Tom Doggett; Additional reporting by Jeffrey Jones in Calgary, Editing by Peter Cooney)

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Comments (1)
emanon63026 wrote:
And from here it goes to China…because they’ll pay more to the oil companies than we will……

Jun 04, 2011 10:21pm EDT  --  Report as abuse
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