TC Energy to give update on Keystone pipeline restart Wednesday

© Reuters. FILE PHOTO: Emergency crews work to clean up the largest U.S. crude oil spill in nearly a decade, following the leak at the Keystone pipeline operated by TC Energy in rural Washington County, Kansas, U.S., December 9, 2022. REUTERS/Drone Base/File Photo

By Nia Williams and Rod Nickel

(Reuters) -TC Energy said it expects to give an update on the Keystone pipeline restart later on Wednesday, a week after the 622,000 barrel-per-day pipeline was shut after leaking oil into a creek in Kansas.

Keystone is a crucial artery shipping Canadian crude south to U.S. refineries and traders have been awaiting news of when it may restart operations. The 14,000-barrel leak was the largest U.S. oil spill in nearly a decade and the clean-up operation could take weeks.

The spill occurred just south of a key junction in Steele City Nebraska, where Keystone splits into two legs. Market players have speculated TC may first restart the leg of the pipeline that delivers to Patoka, Illinois, which did not leak.

Bloomberg on Tuesday reported the Patoka leg could restart on Wednesday, citing sources.

"We don't have a confirmation of a timeline and anticipate an update on re-start today," TC said in an email.

Canadian crude prices have been relatively steady since Keystone shut down because of ample spare capacity in Alberta storage hubs, but the discount on Western Canada Select, the benchmark heavy grade, has started to creep wider as the outage drags on.

WCS for January delivery settled around $29 a barrel below U.S. crude on Tuesday, from a discount of around $27 a barrel before the leak.

In the short term, more Canadian oil will go into storage, as alternative transportation options are limited, said Matt Murphy, director of energy research at TPH & Co.

Moving crude by rail requires a long lead time and the Enbridge (NYSE:ENB) Inc Mainline system is running at nearly full capacity this month, Murphy added.

The Mainline moves 3.1 million barrels per day of Canadian crude to refineries in the U.S. Midwest and eastern Canada. Enbridge will ration December deliveries by the most since last winter, according to company data.