By John P. Tretbar
The operator of the Keystone Pipeline on Thursday restarted the leg of the system that spilled thousands of barrels of heavy crude in north-central Kansas.
TC Energy announced that after repairs, inspections and testing, and a controlled restart on Thursday, the Keystone system is "...operational to all delivery points." The company said it will operate what it calls the Cushing Extension through Kansas at reduced pressure and with additional risk-mitigation measures under plans approved by the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA). As of Friday morning the company said it had recovered 10,637 barrels of oil, out of an estimated 14,000 barrels spilled from the pipe after the rupture Dec. 8.
Water, soil and metallurgical testing continue, but regulators have been slow to release details of the investigation into the Keystone Pipeline spill in Washington County. Despite media reports suggesting contamination downstream of the containment zone, the Kansas Department of Health and Environment is holding off on releasing the results of its water testing in the area saying they need more data to establish benchmarks for analysis.
The agency's director of communications and legislative affairs Matt Lara said in an e-mail response his agency has preliminary water data samples but needs more sampling and other information before a promised release to the public. Lara says there have been no reports from farmers in the area of wells showing contamination. Free well testing is available through the pipeline operator.
KDHE is not currently testing soil in the area. Lara said the company removed the layer of topsoil that had oil "staining." TC Energy’s environmental consultant will collect soil samples from the spill area to confirm that all contaminated soil has been removed, according to KDHE. The PHMSA continues its probe into the cause of the spill, including metals testing on the section of pipeline that ruptured.
TC Energy was operating the Keystone Pipeline at a dramatically increased flow-rate just prior to the rupture and spill in Kansas. The Energy Consultant Wood-Mackenzie confirmed broadcast reports that flows to the Midwest jumped to almost 650,000 barrels per day on the night of the rupture, up from a baseline of 622,000 barrels per day. The company said in October it would raise flows to test the system's operational efficiency.
In an email response to our request for comment, the company replied "At the time of the incident, the pipeline was operating within its design and regulatory approval requirements."
Russia banned the sale of its oil and petroleum products to countries that put a cap on the price. The Kremlin is trying to undermine one of many sanctions prompted by the invasion of Ukraine. The G-7 countries want to bar the shipping, financing or insuring of seaborne Russian crude unless it is sold for $60 a barrel or less. Russia is also preparing to cut production early next year, according to its oil minister.
Winter weather has dramatically curtailed crude output from the No. 3 producing state in the country. S&P Global reports current production in North Dakota of about 650,000 to 700,000 barrels per day, down from 1.12 million barrels per day in September and October. A blizzard on Dec. 19 shut in more than 400,000 barrels per day of production, and more shut-ins occurred the following week.
U.S. crude production drops below 12 million barrels per day for the first time in eight weeks and only the third time since June. The Energy Information Administration reports U.S. output of 11.954 million barrels per day for the week through Dec. 23, down 196,000 barrels per day from the week before.
EIA reports crude imports of 6.3 million barrels per day for the week, up 433,000 barrels per day from the week before. The four-week average is down 3.8 percent from a year ago.
The government said domestic crude-oil inventories increased last week by 700,000 barrels to 419 million barrels as of Dec. 23. Stockpiles are about 6 percent below the five-year average for this time of year.
Marathon Oil Corporation completed a big bucks acquisition first announced in November. Ensign Natural Resources will reap a total cash consideration of $3 billion. In return, Marathon takes over assets in the Eagle Ford basin of South Texas which they predict will deliver more than 22,000 barrels of oil per day.
Crude prices Friday were up slightly. The benchmark Nymex contract was trading for $78.87 per barrel. London Brent was a few cents over $84. Kansas crude prices dropped 75 cents on Thursday, with Kansas Common crude fetching $68.75 per barrel at CHS in McPherson. That's about $3 less than at the start of the month, and about $3 more than at the start of the year.
Just as you start driving less, pump prices plummet. According to the latest numbers from the government, gasoline stockpiles dropped by 3.1 million barrels last week. The Energy Information Administration says gasoline inventories are about 4 percent below the five-year seasonal average. But, regular gasoline prices continue to drop, down to $3.17 a gallon nationwide (Dec. 30). It's going for $2.79 across Kansas. Going into the holiday weekend we spotted anywhere from $2.79 to $2.89 per gallon locally. Diesel Inventories increased 300,000 barrels last week but remain about 7 percent below the five-year seasonal average. Diesel deliveries are down almost 7 percent from a year ago. U.S. and statewide diesel-fuel prices remain above $4 per gallon.