B.C. Trans Mountain pipeline leak small, but ill-timed

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The operator of  the only major crude oil pipeline to Canada's West Coast from Alberta was forced to shut the system down after a spill was discovered in the British Columbia interior, the latest incident to hit the industry as it seeks to vastly expand exports to lucrative Asian markets.

Kinder Morgan Energy Partners LP said it turned off the Trans Mountain oil pipeline after discovering what it initially estimated to be about 12 barrels, or roughly two cubic metres, of spilled crude while conducting maintenance in a remote area near Kingsvale, B.C. The incident was reported late Wednesday afternoon and repairs are under way, the company said.

The National Energy Board, which regulates the line, said there were no immediate safety concerns. "The pipeline has been shut down to prevent additional oil from being released into the environment and the company is currently in the process of contacting area residents," the board said in a statement.

The Trans Mountain pipeline carries up to 300,000 barrels of oil a day from Edmonton to Burnaby, B.C., where it provides Alberta crude to refineries in B.C. and Washington, as well as to export markets via a marine terminal. The company did not say when it might reopen the pipeline.

Such a spill volume is not large, but any release of crude comes at a tricky time for the oil industry as it seeks to expand capacity to the Pacific Coast, allowing currently discounted Alberta supplies to reach richer international markets. However, the first proposal, Enbridge Inc.'s Northern Gateway pipeline, faces opposition from environmental groups, First Nations communities and even the B.C. government, which fear environmental damage from oil spills on land and in coastal waters.

Kinder Morgan, meanwhile, has plans to nearly triple the capacity of the 1,150-kilometre Trans Mountain system to 890,000 barrels a day with a project that would cost about $5.4-billion. It has said it aims to file a regulatory application later this year.

The Trans Mountain incident the second leak from energy operations reported this month. In Northern Alberta, 9.5 million litres of toxic waste from an oil and gas operation run by Apache Corp spread over 42 hectares of land.

Oil trade sources said Canadian heavy crude discounts deepened on initial word of the outage of the pipeline, which is routinely overbooked as shippers clamor to get their oil to markets away from the oversupplied U.S. Midwest region.

Early in the day, Western Canada Select heavy blend sold for $15.50 a barrel under benchmark West Texas Intermediate, but later recovered to $12.50 under WTI, according to Net Energy Inc., which runs an electronic crude oil exchange.