TC Energy has reduced operating rates on a segment of the Keystone pipeline running from Canada’s oil sands to America’s largest crude hub by about 15% following a disruption to power supplies.
The rate cut impacts the section stretching from Hardisty, Canada, to Cushing, Oklahoma, according to people familiar with the matter. Clients that receive crude on the system’s Marketlink segment, which runs from Cushing to Texas’s Gulf Coast haven’t experienced any disruptions to deliveries, they said.
Pipeline operator TC Energy declared a force majeure on deliveries earlier this week after power supply was disrupted to a facility on the system near Huron, South Dakota. No TC Energy-operated facilities were damaged in the incident, the company said in an update Wednesday. A nearby power supplier said one of its substation transformers was damaged over the weekend.
A prolonged disruption could pressure already tight inventories at the nation’s most important crude hub, which serves as the delivery point for oil futures contracts traded on the New York Mercantile Exchange. A tightening in supplies can trigger sharp rises in prices for crude barrels that are available immediately versus those delivered in the future. High energy prices, a main driver of inflation, have been a challenge for President Joe Biden, who has sought more oil output from the world’s producers.
The transcontinental Keystone network begins in western Canada and runs to Nebraska, where it splits. One branch heads east to Illinois and the other runs south through Oklahoma and onward to America’s refining hub on the Texas Gulf Coast. The line had a capacity of 611,000 barrels-a-day, according to Canada Energy Regulator data published in March.
There is still no timeline for the restoration of power service, TC Energy said in its last update. Media officials declined to respond to questions, saying in an email the company doesn’t comment on commercially sensitive matters.
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