South Bow plans to restart Keystone at reduced rates by Tuesday

By Devika Madhusudhanan Nair

April 12 (Reuters) - South Bow plans to restart the Keystone pipeline by Tuesday, April 15, the company said on Saturday, after it shut the key conduit for the flow of Canadian oil to the U.S. due to an oil spill in North Dakota.

South Bow still needs written approval from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) before restarting the pipeline, the company said. Even after it restarts, Keystone will operate at reduced rates in the U.S. to address a corrective action order issued by the PHMSA on Friday, the company said.

Keystone will also reduce pressure on the Canadian sections of the pipeline, and it has notified with the Canada Energy Regulator of that, it said.

PHMSA earlier on Friday said that Keystone's history of issues shows a pattern of more frequent and larger oil spills on the over 600,000-barrel-per-day pipeline.

A 2021 report from the U.S. Government Accountability Office found 22 spills from the pipeline between 2010 and 2020.

PHMSA has also ordered South Bow to re-evaluate previous inspection tests of the pipeline, and conduct new mechanical and metallurgical testing. South Bow has also agreed to conduct a root cause failure analysis.

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.

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.