Shippers seek alternatives for oil as crews work toward plugging Keystone leak
By Laila Kearney and Rod Nickel

NEW YORK/WINNIPEG (Reuters) – Cleanup crews in Walsh County, North Dakota, are working toward plugging the Keystone pipeline after a more than 9,000-barrel oil leak this week, a state official said Friday, while crude shippers are searching for alternative means of transport.

The shutdown caused by the spill threatens a large amount of regular supply of heavy Canadian crude to the United States. Canada is the biggest foreign provider of oil to the United States, with exports to the U.S. averaging about 3.6 million barrels per day (bpd) in 2018, according to the federal Canada Energy Regulator.

The 590,000-barrel bpd Keystone system, owned by TC Energy Corp, is a key artery for Canadian heavy crude, imported by United States for blending with other oils to be refined into gasoline, diesel and other fuels.

“When something like (a shutdown) happens, it’s all hands on deck for what you do to keep barrels flowing,” Chief Executive Rich Kruger of Exxon-owned Imperial Oil <IMO.TO> said, on a quarterly conference call on Friday. “Not knowing what the situation is, how long it may be offline.”

Imperial, which owns contracted space on Keystone, is looking into shipping alternatives for the short and long term, Kruger said.

TC Energy was not immediately available for comment.

Keystone’s closure has forced TC Energy’s Marketlink pipeline from the Cushing, Oklahoma storage hub to Nederland, Texas, to reduce rates.

About 60 percent of Canada’s U.S. exports go to the Midwest.

The cause of the leak is unknown. The spill, first detected by TC Energy on Tuesday night, occurred near a TC Energy pumping station, and saturated an area about half the size of a football field, the company and state officials said.

Karl Rockeman, director of the North Dakota Division of Water Quality, whose department is overseeing the cleanup, said crews were focused on reaching the leak to prevent “any further oil that may be sitting in the pipeline from being released.”

Clean-up efforts remained focused on vacuuming up oil, before excavating the underground pipe, said Walsh County emergency response manager Brent Nelson.

The leak took place in a rural area close to the small city of Edinburg in the northeastern part of the state. The nearest home is about three-quarters of a mile away, Nelson said.

(Reporting by Laila Kearney and Rod Nickel; Editing by David Gaffen and Steve Orlofsky)