Keystone operator given corrective action order after North Dakota oil spill

By Devika Madhusudhanan Nair

April 12 (Reuters) - U.S. regulators say there could be structural issues with the Keystone Pipeline and have issued a corrective action order to its operator, South Bow Corp SOBO.TO, after an oil spill in North Dakota shut the key conduit for the flow of Canadian oil to the U.S. earlier this week.

South Bow must obtain written approval from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) before restarting the pipeline, according to the order issued on Friday. Even after it restarts, Keystone will have to operate at reduced rates until PHMSA allows it to ramp up, the order stated.

PHMSA did not provide a timeline for the restart. South Bow did not immediately respond to a request for comment.

Keystone was pumping about 17,844 barrels of oil per hour when a part of the pipeline ruptured on Tuesday near Fort Ransom, North Dakota, spilling an estimated 3,500 barrels onto agricultural land.

As of 1 a.m. CDT on April 11, around 1,170 barrels of the spill had been recovered and cleanup operations were ongoing, according to the PHMSA.

There have been increasingly frequent incidents causing larger spills on Keystone in recent years, PHMSA said. A 2021 report from the U.S. Government Accountability Office found 22 spills from the pipeline between 2010 and 2020.

The regulator said this week's rupture looked similar to another one on the same pipeline in North Dakota in 2019, in which over 4,000 barrels of oil were leaked. Initial findings of PHMSA's investigation show the failed pipe in both incidents was manufactured by Berg Steel Pipe.

Berg Steel did not immediately respond to a request for comment.