The offline period for the Keystone oil pipeline was too brief to cause major disruptions on the crude market, a director at East Daley Analytics (EDA) said March 8.

TC Energy temporarily suspended service on the Keystone line on March 7 as a precautionary measure, Reuters reported. In a statement, the company said it had checked the pipeline’s integrity and no oil had spilled.

Canada moves about 4.4 MMbbl/d across the border into the U.S. Keystone carries about 600,000 bbl/d—approximately 14% of that volume, said Kristy Oleszek, EDA director of energy analytics. 

“Keystone being down for less than a full day will not have a material effect on Canadian production flows or U.S. oil markets,” Oleszek said.

TC Energy made the decision to halt service after pressure dropped on a line segment from Hardisty, Canada, to Steel City, Nebraska, meaning the line is potentially sending less oil to the storage hub in Cushing, Oklahoma, Bloomberg reported. Enbridge’s Mainline, which has a capacity 2.85 MMbbl/d, is the primary alternative for transporting Canadian crude into the U.S.

On March 8, U.S. crude oil futures briefly went over $79.90/bbl but had dropped below $78/bbl later in the day.

Keystone Pipeline
(Source: Rextag)

One analyst reported that Canada has been experiencing a pattern of sporadic network outages, due possibly to the country's packed pipelines. Thanks to increasing crude production, the available infrastructure is constantly running close to capacity.

“Canada is moving every barrel they can through available egress options,” Oleszek said. “All of the pipelines are at the threshold of what they can carry as producers wait for the long overdue Trans Mountain Expansion, TMX, to come online.”

Line fill for the TMX is expected to begin in April. The Trans Mountain Pipeline, running from Alberta to the Canadian West Coast, will triple the available lines capacity from 300,000 bbl/d of crude to 890,000 bbl/d. Trans Mountain Corp., the government-owned company building the line, announced March 1 that the system would be running at maximum capacity once it opens.

Builders are working to keep to the most recent in-service date forecasted for March or May of 2024. Trans Mountain announced the new in-service date in January after moving the last opening date back from the first quarter of 2024.

“The markets reacted aggressively to the news that TMX is once again delayed as line fill is slated for March and April 2024,” Oleszek said.

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