The Keystone Pipeline that transports Canadian heavy and light crude oil from Hardisty, AB to Cushing, OK suffered a line break at milepost 171, near Fort Ransom, ND in the morning hours of April 8. The break was quickly isolated and the pipeline shut down by its owner and operator, South Bow Corporation, but did result in the spill of an estimated 3,500 barrels of crude oil onto a farmer’s field. Repair and clean-up crews are onsite with South Bow declaring force majeure with an unknown timeline to repair and restart. Keystone is a single 30-inch diameter pipeline that has a capacity of ~620 Mb/d (dashed black line in chart below) and carries almost exclusively heavy crude oil from Alberta to the oil storage hub at Cushing, with a spur line that runs from Steele City, NE to Wood River and Patoka, IL.
Featured Articles
Synchronicity - Canadian Heavy Oil Prices Increasingly Align With Other North American Trading Hubs
In the past, Canadian heavy oil was all too often the sick man of the North American oil market. Plagued by a limited number of refinery outlets and numerous episodes of insufficient pipeline export capacity from Western Canada, it was often subject to far larger price discounts versus the light crude oil price benchmark of West Texas Intermediate (WTI) than was justified by quality and pipeline transportation costs alone. In the past few years, however, improved pipeline export capacity to and through the U.S. has expanded the number of refineries Canadian heavy oil can reach, and the expansion of crude oil export terminals along the Gulf Coast has resulted in greatly improved exposure for Canadian barrels to buyers in international markets. The end result has been a closer alignment of Canadian heavy oil pricing in its home base of Alberta with those in the Midwest and Gulf Coast.
The Shape I'm In - Rising Canadian Production, Takeaway Constraints and WCS Price Discounts, Part 3
Producers in the Western Canadian Sedimentary Basin (WCSB) are in a bind. Crude oil output in the WCSB has risen by more than 50% over the past seven years to about 4 MMb/d and is expected to increase to 5 MMb/d by the mid-2020s. But there has been only a modest expansion of refinery capacity within the region and pipeline capacity out of the WCSB, and lately takeaway constraints have had a devastating effect on the price relationship between benchmark Western Canadian Select (WCS) and West Texas Intermediate (WTI). What’s ahead for WCSB producers and WCS prices? Today, we continue our series on Western Canadian crude and bitumen markets, this time focusing on WCSB refinery capacity and existing pipelines out of the region.
Synchronicity, Part 2 - Canadian Heavy Oil Prices Increasingly Linked to Global Oil Market Developments
Since the start of this year, Canadian heavy crude oil prices have been steadily improving relative to the light crude oil benchmark of West Texas Intermediate (WTI). Improved access to and through the U.S. as far south as the Gulf Coast has contributed to these better conditions. At the same time, the traditional driver of increasing refinery demand after the end of the most recent maintenance season is being aided by the restart of two Midwest refineries that have typically been consumers of Canadian heavy oil. With international competitive pressures also easing and export buyers remaining active in the Gulf Coast, heavy oil prices could remain in a sweet spot for a good portion of this year. In today’s RBN blog, we look at why international competition for Canadian heavy crude will only intensify next year as vastly increased export access from Canada’s West Coast becomes available.
